Sona Comstar row shows why Indian firms must let professionals lead

Over the past few years, several companies—Hikal, Godfrey Phillips India, Finolex Cables, and Raymond—have seen their business performance, investor confidence, and boardroom dynamics destabilized due to promoter or family disputes.

These conflicts hurt minority shareholders, sap management bandwidth, and destroy wealth. The absence of formal succession planning and the refusal to separate ownership from management has become one of the biggest governance risks in Indian companies.

Sona Comstar conflict

Sona Comstar is a professionally run, board-led, publicly listed auto component manufacturer, with promoters holding a 28.02% stake through a company called Aureus Investment Private Ltd.

In June 2025, Sona faced the unexpected demise of its non-executive chairman, Sunjay Kapur. The company appointed independent director Jeffery Mark Overly as chairman, and Priya Sachdev Kapur, Sunjay’s wife, was brought on as a non-executive director.

What followed, however, was a storm of accusations from Sunjay Kapur’s mother, Rani Kapur. Claiming she was entitled to a majority shareholding under her late husband’s will, she accused the board of coercion, exclusion, and lack of transparency. She demanded that the company’s AGM be postponed, alleging the board had acted against her interests.

The company’s response was categorical: Rani Kapur had not held any shares in Sona Comstar since 2017 and had ceased to be a director on the board in 2019. All decisions, it said, had been taken lawfully, with shareholder approval where required. The AGM went ahead as scheduled, and the board’s composition remained unchanged.

But the episode, playing out in the media, illustrates a troubling trend: promoters and their families continue to believe that personal ties entitle them to special treatment, even when they no longer hold legal ownership or managerial authority. This belief must be challenged if India is to protect the integrity of its capital markets.

A board-run company is not a family fiefdom

The moment a promoter or founder lists their company on a stock exchange, they must accept that the company is also owned by others. Governance must shift from lineage to corporate law. Shareholders, not family elders, are now the true owners. And the board of directors becomes the supreme decision-making body.

Promoters may continue to play an important role, but within clearly defined boundaries: they can nominate directors in proportion to their shareholding, vote at general meetings like any other shareholder, and offer strategic input when invited. What they cannot do is bypass the board, demand special privileges, or impose personal claims on company decisions.

The Sona Comstar dispute shows what happens when these lines are blurred: uncertainty, reputational damage, and a breakdown in governance.

Learning from others: The importance of succession planning

The Sona Comstar episode also underscores a long-standing weakness in Indian family-run enterprises: the failure to plan for succession and wealth transfer.

In many of the earlier cases mentioned, promoters delayed or avoided difficult conversations around wills, trusts, and inheritance, leading to chaos when a founder passes away.

Well-run companies institutionalize succession frameworks. Family-owned companies should create family charters, shareholder agreements, or trust structures to ensure clarity and continuity. This allows the business to function without being derailed by internal family strife.

The Securities and Exchange Board of India, to its credit, introduced new regulations in July 2023 requiring listed companies to disclose family settlement agreements. But in practice, disclosures have been patchy, vague, or purely procedural.

If promoters treat compliance as a formality rather than a commitment to transparency, these reforms will fail to deliver real accountability.

The board’s role in insulating the company

Boards must now assume a more assertive role, not as passive overseers, but as active protectors of shareholder value and corporate integrity. In the face of promoter disputes, boards must ensure that professional management is insulated from family politics; that company funds are not misused to fight personal battles; that employee morale and operations remain unaffected; and that a full-time, independent CEO is empowered to make decisions based on merit and strategy.

Global and domestic institutional shareholders want evidence that a company is run by professionals and governed by law. Boards that fail to ring-fence management from promoter interference will face hard questions from shareholders, analysts, and regulators.

Disputes like the one at Sona Comstar do more than damage reputation, they erode investor trust and destroy value for all. They signal to the market that a company may not be ready to embrace the rigour of modern corporate governance.

In contrast, promoters who act as stewards, offering vision, participating constructively through the board, and respecting professional autonomy, can continue to add immense value. Companies like Marico, Infosys, and Asian Paints exemplify this model, where promoters have stepped back from day-to-day operations while continuing to play a strategic role through the board.

Governance must trump legacy

The Sona Comstar dispute is a wake-up call: in business, the line between promoter influence and corporate governance must be clearly drawn and firmly enforced.

Families must formalize succession, make transparent disclosures, and relinquish informal power when their legal control ends. Boards must act independently, protect the company’s interests, and prioritize professional management.

Regulators, like Sebi and the Ministry of Corporate Affairs, must push for genuine, not symbolic, compliance. Ultimately, in a democracy of capital, only shareholding determines influence. Legacy may build a company, but governance is what keeps it standing.

The author is founder and MD, InGovern Research Services. Views are personal.