'Promoter' vs 'person in control': How will Sebi's new proposal play out?

The rationale behind replacing the concept of "promoter" with "person in control" is to absolve entities, which, in real­ity, don't have any control over a company

Market regulator Securities and Ex­ch­a­nge Board of India (Sebi) has proposed to replace the concept of “promoter” with “person in control” for India Inc. Let’s find out what warrants such as move and how it could play out.

Who is a promoter?

A promoter can be an individual, a corporate entity or a group of entities with whom vest/s ownership and controlling rights of a company. Under Sebi’s ICDR Regulations (Issue of Capital and Disclo­sure Requirements), a “promoter” is someone who exercises direct or indirect control over a company.

Direct control can be in the form of significant equity ownership. Indirect co­n­trol can