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