Promoter and Promoter Group

The Securities and Exchange Board of India (Listing Obligation and Disclosure Requirements) Regulations 2015 was notified on 2^nd September 2015 and will come into force from 1^st December 2015. In this post we will discussion definitions of promoter and promoter group in these regulations.

The “promoter” and “promoter group” shall have the same meaning as assigned to them respectively in clauses (za) and (zb) of sub-regulation (1) of regulation 2 of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009. [Regulation 2(1)(w) of the SEBI (LODR) Regulation 2105]

Promoter

“Promoter” includes:

1. The person or persons who are in control of the issuer;
2. The person or persons who are instrumental in the formulation of a plan or programme pursuant to which specified securities are offered to the public;
3. The person or persons named in the offer document as promoter. [Regulation 2(1)(za) of SEBI (ICDR) Regulation 2009]

A director or officer of the issuer or a person shall not be deemed as a promoter, if such director or officer or person is acting as such merely in his professional capacity. A financial institution, scheduled bank, foreign portfolio investor other than Category III foreign portfolio investor, and mutual fund shall not be deemed to be a promoter merely by virtue of the fact that ten percent or more of the equity share capacity of the issuer is held by such person. A financial institution, scheduled bank and foreign portfolio investor other than Category III foreign portfolio investor shall be treated as promoter for the subsidiaries or companies promoted by them or for mutual fund sponsored by them. [First, second and third proviso to Regulation 2(1)(za) of SEBI (ICDR) Regulation 2009]

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Promoter Group

A “promoter group” includes:

1. The promoter;
2. An immediate relative of the promoter (i.e. any spouse of that promoter or any parent, brother, sister or child of the person or of the spouse); and
3. In case promoter is a body corporate:
   1. A subsidiary or holding company of such body corporate;
   2. Any body corporate in which the promoter holds ten percent or more of the equity share capital or which holds ten percent or more equity share capital of the promoter;
   3. Any body corporate in which a group of individuals or companies or combination thereof which hold twenty percent or more of the equity share capital in that body corporate also hold twenty percent or more of the equity share capital of the issuer; and
4. In case the promoter is an individual:
   1. Any body corporate in which ten percent or more of the equity share capital is held by the promoter or an immediate relative of the promoter or a firm or a Hindu Undivided Family in which the promoter or any one or more of his immediate relative is a member;
   2. Any body corporate in which a body corporate as provided in (a) above hold ten percent or more of the equity share capital;
   3. Any Hindu Undivided Family or firm in which the aggregate shareholding of the promoter and his immediate relative is equal to or more than ten percent of the total; and
5. All persons whose shareholding is aggregated for the purpose of disclosing in the prospectus under the heading “shareholder of the promoter group”.

A financial institution, scheduled bank, foreign portfolio investor other than Category III foreign portfolio investor, and mutual fund shall not be deemed to be a promoter group merely by virtue of the fact that ten percent or more of the equity share capacity of the issuer is held by such person. A financial institution, scheduled bank and foreign portfolio investor other than Category III foreign portfolio investor shall be treated as promoter group for the subsidiaries or companies promoted by them or for mutual fund sponsored by them. [First and Second proviso to Regulation 2(1)(zb) of SEBI (ICDR) Regulation 2009]