Business Families Add Milestone Clauses to 20-Year Settlements as Succession Plans Turn More Flexible
Updated
Updated · The Economic Times · Aug 12
Business Families Add Milestone Clauses to 20-Year Settlements as Succession Plans Turn More Flexible
1 articles · Updated · The Economic Times · Aug 12
Summary
Lawyers and advisers say more business families are rewriting old family settlements to add limited “fluidity” clauses that allow changes at defined intervals or milestones instead of reopening the entire pact.
The push follows disputes over decades-old agreements and changing assumptions about succession, asset values, marriages, divorces, acquisitions and regulation that can make static settlements unworkable.
One Mumbai family that split a trading house and real estate assets in the early 2000s now wants a narrow change so the branch that got trading can also use the family name in real estate.
Another three-generation family wants a clause covering overseas heirs who are passive shareholders today but may later return to India and seek active management roles.
Advisers say any flexibility still needs unanimous consent unless authority is delegated, and poorly drafted review mechanisms can create the ambiguity and disputes the settlement was meant to prevent.