**Amara Raja Energy’s Founder Transfers 33% Stake to Family Trusts Amid Corporate Trends**
Amara Raja Energy and Mobility Ltd’s founder has recently allocated a 33% stake of the promoter entity to four newly established family trusts, reflecting a growing trend among Indian promoters to safeguard family wealth. Ramachandra Naidu Galla, 86, serves as the controlling trustee of these trusts, as noted in a recent exchange filing by the second-largest lead-acid battery manufacturer in the country.
The establishment of these family trusts aims to facilitate a structured and smooth intergenerational succession of Dr. Galla’s assets, including shares and control, thereby minimizing the potential for future disputes, as stated in the filing published on March 3.
Promoters of family-owned businesses are increasingly adopting the family trust model to maintain ownership while allowing professional managers to oversee various operations, inspired by conglomerates like the Tata and Adani groups. Founders of companies such as Havells India Ltd and Prestige Estates Ltd also utilize trusts to hold their shares.
According to Sougata Ray, a professor at the Indian School of Business, creating a trust structure where the patriarch remains the controlling trustee helps consolidate and protect family asset ownership, ensuring that the company’s future remains within the family.
Shaishavi Kadakia, a partner at Cyril Amarchand Mangaldas, noted that trusts provide protection for promoter families, as individual members cannot transfer shares freely and must follow the trust deed’s guidelines. Additionally, the Securities and Exchange Board of India has exempted around 120 family-owned promoter trusts from making open offers when acquiring shares of listed companies, with the first exemption granted in 2005.
While family trusts offer a protective structure, they are not without challenges, as evidenced by various high-profile disputes among business families in India.
