The Securities and Exchange Board of India (SEBI) is mulling a shift
from the ‘outdated’ promoter concept to ‘controlling shareholders’
for listed companies. This change in the corporate structure would
bring market regulations on par with global practices and ensure
that, while the shareholders have power, they do not overshadow
the board.
Notably, while this may be seen as a ‘radical’ shift in India;
several global markets have already done away with promoters.
SEBI is, thus, considering introducing controlling shareholders,
with de facto control, but those whose decisions or actions cannot
overshadow the board or management.
Further, the shift may reduce compliance and disclosures by
listed firms and the promoter or promoter group.
"Moving away from promoters to controlling shareholders is like moving away from a 'family feudal concept to a democratic concept," the source added.
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