Case Study No 3 – Business Succession Planning 02
A Third-generation business house having diversified interest in Engineering, Chemicals and Financial Services. Assets spread across pan India and few international geographies. Listed companies held through a matrix of Pvt. Ltd companies, HUFS & individual name. The client was looking at a structure to consolidate the assets and avoid any future litigation.
This family had some international assets and had already set up a trust in BVI. A separate trust structure was set up to take care of India Assets.
Family Tree:
Assets:
- 3 Listed companies with the market of 13,500/- crores
- 12 Pvt. Ltd companies (holding the shares in the listed entities)
- Investment companies
Family Assets:
- Real estate properties
- Commercial properties
- Investments
- Art
- Jewelry
- International assets
Structure:
Advantages of the Holding Company Structure:
- Avoid cross holding between the group companies
- Help divide the firms among the next generation later
- Such cross holdings between the group firms have often been the bane of succession planning in many Indian Business groups and led to family disputes
- Single holding firm
- Transparent ownership Structure
- Raise money to fund future expansion, by offering lenders shares in the new holding company as collateral.
- Will give the promoters lot of options and flexibility to divide the ownership of the companies without disturbing the management of these companies
Structure:
- Holding Company, Family Office, Family Assembly, Family council, Charitable purpose vehicles and Trust set up.
- These Structures helps the family mitigate the tangible challenges like
- Ownership
- Control
- Family assets
- Financial security on a continual basis
Processes, Rules and Policies:
- Vision and mission statement
- Family value record
- Intra Family Share Holders family
- Dividend policy
- Employment Policy
- Remuneration Policy
- Code of conduct
- Policy dealing with conflicts of interest
- Charity/ philanthropy policy
- Education, Training and development policy
- New business policy
- Family Budget Policy
- Investment Policy
- Roles and Responsibility Policy
- Reporting
- Exit PolicyIntra Family Share Holders family
