India Inc’s Promoter Raj has run its course. Time to rewrite the succession script

Corporate India's revolving doors have swung open with a raft of recent resignations and departures involving some of the most recognisable CEO faces. The high-profile exits even include new-age tech and digital disruptors like Meta, as well as some of the most storied business houses like Tata, Godrej, Kotak, HDFC Bank and IndiGo.

Some of these transitions have been cordial, thought through and orderly handovers. The warring, controversial and morale-sapping ones, though, are undermining some of the trusted brands, managerial bench strength and governance gold standards. Conglomerates that have been cash spigots, or capillaries of growth, are fast getting entangled in trouble spots.

As the succession script gets tested like never before, our business founders would do great service if they simply let go. That begins with doing away with the legal fiction called 'promoter'. The idea of promoter-led firms also needs a thorough spring-cleaning.


As a category, it does not exist anywhere in the world but in India, as a colonial partnership construct that segregated control from ownership. Much of our mercantile class that prospered under the British Raj trading opium, cotton, etc, continued to thrive even after Independence, led by some offshoots of the same managing agents. By then, many had become founding fathers of India Inc, but with scant equity capital of their own.

In the 1970s, even though US-style shareholder capitalism became prevalent across most other postcolonial Asian companies, only local outposts of MNCs like Hindustan Unilever adapted such avatars. Their real power centres, though, remained at their overseas HQ.

Over time, Indian promoters got legal cover, as well as a definition under Companies Act and securities law. They are predominantly founders who need to own at least 20% of the post-public issue capital with an 18-mth lock-in. They exert control, act as a lodestone advising the board, based on which the directors are 'accustomed to act'.

But in today's geopolitical and AI- induced 'flux and destroy' landscape, promoters with privileges in perpetuity have outlived their purpose. Along with it, the idea that it's only promoter progeny who can embody both capital and enterprise in the same person has become flawed.

To be sure, CEO turnover in the world's largest listed companies reached a new record in a row in 2025, 21% above an 8-yr average. External hires accounted for a third of S&P 500 CEO successions last year. Appeal of a fresh-eyed leader who can navigate mushrooming uncertainties is obvious. He or she can tear up existing blueprints and have more latitude to take difficult decisions. Look no further than GE or Boeing.

If a promoter seeks special status due to his or her contribution towards IP or seed capital, he or she can exert control through differential voting rights (DVR), the market for which ought to develop in India. Capital contribution alone doesn't make one entitled to run a business by default or birth.

Even minority shareholders bring their share of equity capital. Let all equity holders enjoy their proportionate returns in the form of dividends and share price appreciation. And to maximise shareholder value creation, competence - not clan - should be the sole criteria.

One can, indeed, go horribly wrong with non-promoters who do not have large enough stake in an enterprise's success, but seize disproportionate power and influence. But unless you bet on an outsider CEO, who do you even get lucky with?

Even scions are telling patriarchs that across the world, there is a 'quiet quitting' underway. These inheritors are unwilling, or simply unable, to keep the family concerns going, let alone allow it to thrive. Inept younger generation unable to grasp modern-day complexities can also run a business to ground. Bankruptcy and a subsequent takeover are a genuine risk that didn't exist even a decade back.

Moreover, on the back of world-class institutions of academic excellence, India today is gifted with an enormous managerial pool of global scale and competence. These well-trained, talented technocrats are excelling globally. This demographic dividend, many of whom are already corporate America or even Europe, should be leveraged.

This is not to say all blue-blooded members of GenNext lack hunger or chutzpah to run businesses. Groups with high political exposure tend to rely more on family for loyalty. But let shareholders cherry-pick the 'child' for his or her special qualities, relationships or prowess. Else, let the best man or woman for the job win.

arijit.barman@timesofindia.com