COURTKUTCHEHRY SPECIAL ON NEED FOR SEBI’s TAKEOVER CODE AMENDMENT IN “RELATIVES” DFEINITION
SEBI Takeover Code Debate: Why Business Families Want Daughters-in-Law Recognized as Relatives
Succession Planning and Family Trusts Face Legal Hurdles
Changing Social Norms Push Regulators to Rethink Corporate Governance Rules
By Our Business Reporter
New Delhi: January 09, 2026:
India’s corporate landscape is deeply intertwined with family-run businesses. From conglomerates like Reliance and Tata to regional giants, promoter families play a central role in governance and succession. However, as society evolves, so do family structures.
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A new debate has emerged: Should daughters-in-law be legally recognized as “relatives” under SEBI’s takeover code? Business families argue that excluding them creates unnecessary hurdles in succession planning, especially when promoter holdings are moved into family trusts. The issue has gained traction after several families approached SEBI in January 2026, seeking amendments to the takeover regulations.
Current Legal Framework
- SEBI Takeover Code (2011): Defines “relatives” for the purpose of promoter groups.
- Exclusion: Sons-in-law and daughters-in-law are not included in the definition.
- Impact:
- Daughters-in-law cannot be trustees in family trusts holding company shares.
- Succession planning becomes complicated when promoter families want to include them in governance structures.
- Creates legal ambiguity in ownership and voting rights.
Why Families Want Change
1. Succession Planning
- Promoter families often transfer shares into family trusts for smooth generational transition.
- Excluding daughters-in-law prevents them from being trustees or beneficiaries, complicating inheritance.
2. Social Evolution
- In modern India, daughters-in-law are active participants in family businesses.
- Many hold leadership roles, manage operations, or represent families in public life.
3. Gender Equality
- Recognizing daughters-in-law as relatives aligns with broader efforts to empower women in corporate governance.
- It removes implicit bias in regulatory definitions.
4. Avoiding Disputes
- Succession battles often arise when family members are excluded from legal structures.
- Including daughters-in-law reduces ambiguity and strengthens family unity.
Case Studies
- Reliance Family Trusts: Structured to include multiple family members, but legal definitions limit flexibility.
- Regional Conglomerates: In states like Gujarat and Rajasthan, daughters-in-law often manage key business functions but face legal exclusion.
- Global Practices: In countries like the US and UK, family trusts freely include in-laws, reflecting inclusive governance.
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Expert Opinions
- Legal Analysts: Say SEBI’s current definition is outdated and does not reflect modern family structures.
- Corporate Lawyers: Argue that inclusion will simplify trust management and reduce litigation.
- Business Families: Stress that daughters-in-law are integral to succession and governance.
- Critics: Warn that expanding definitions may complicate takeover regulations and dilute accountability.
Broader Context
- India has over 5,000 listed companies, many controlled by promoter families.
- Family-owned businesses contribute nearly 70% of India’s GDP.
- Succession disputes have led to prolonged litigation, affecting investor confidence.
- SEBI’s move to reconsider definitions reflects the regulator’s effort to balance family governance with investor protection
Global Comparisons
- United States: Family trusts freely include in-laws; corporate governance focuses on fiduciary duties.
- United Kingdom: Inclusive definitions allow smoother succession planning.
- Singapore: Arbitration-friendly laws support family business transitions.
- India’s restrictive definitions stand out as an anomaly in global corporate governance.
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Challenges Ahead
- Regulatory Balance: SEBI must ensure that expanding definitions does not weaken takeover protections.
- Investor Concerns: Minority shareholders worry that broader family definitions may consolidate promoter control.
- Implementation: Amending rules requires careful drafting to avoid loopholes.
Conclusion
The debate over recognizing daughters-in-law as relatives under SEBI’s takeover code reflects the intersection of law, society, and business. As family businesses evolve, regulatory frameworks must adapt to ensure smooth succession, gender equality, and corporate stability.
By amending the takeover code, SEBI can modernize India’s corporate governance, align with global practices, and reduce disputes in promoter families. The move would not only empower women but also strengthen investor confidence in India’s family-owned enterprises.
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