Let promoter clause remain for better accountability
May 14, 2021
Difficult to unearth Sahara-like scams if disclosures are curtailed in DRHP
The market regulator Securities and Exchange Board of India last week came out with an important consultation paper on the ‘Review of the regulatory framework for promoter, promoter group and group companies.’
The paper has proposed to rationalise the definition of ‘promoter group’ and move to the concept of a ‘person in control’ as well as reduce minimum lock-in periods for promoters and other shareholders post an IPO.
According to SEBI, the investor landscape in India is now changing. Unlike the past, the concentration of ownership and controlling rights do not vest completely in the hands of company promoters or the promoter group. There has been a significant increase in the number of private equity and institutional investors who invest in companies and take up substantial shareholding, and in some cases, control.