Removing barriers

Author: Karry Lai | Published: 10 Mar 2020

In-house counsel, industry groups and private practice lawyers are unanimous in their view that the promoter concept is losing relevance and needs to change to encourage Indian companies to go public

Should Indian regulators revamp the promoter concept to encourage Indian companies to go public?

The concept of a promoter – essentially, someone who is connected to the business from the start – has been around for a long time in India, and is relatively common practice for the large numbers of family-run businesses operating in the country. The closest equivalent in international practices is a controlling shareholder – though a promoter is not necessarily a majority shareholder. They are most often company founders who continue to have control over decision-making processes.

Yet the growing burden of responsibilities and liabilities of promoters are taking their toll on companies that want to grow. Many digital-era Indian companies want to go public but are feeling...