Promoter meaning in simple words: who really controls a company
Promoter: the person or group that started or controls a company, usually its biggest shareholder, and is named as the promoter in its official filings.
The story
two people, one chai stall
Riya is filling in the quarterly shareholding pattern. Sameer reads over her shoulder.
SameerWhy does this form call me the "promoter"? I make chai, I don't promote concerts.
RiyaIn company law, the promoter is whoever controls the company. You started it, you run it, and you own the most shares.
SameerHow many, exactly?
Riya3 crore of our 5 crore shares. That's 60%. The public holds the other 40%: individuals 25%, mutual funds 8%, foreign investors 4%, others 3%.
SameerWhy does anyone care?
RiyaBecause what you do moves the price. If you sell, people wonder why. If you buy, they think you know something good.
SameerDo I have special duties?
RiyaPlenty. At the IPO, some of your shares were locked in so you couldn't sell them. And every quarter we report what you hold, and whether any of it is pledged.
SameerPledged?
RiyaThat's a story for another day. Thirty lakh shares of a story, actually.
The grown-up version
same idea, exact words
Under SEBI's rules, a promoter includes anyone named as one in an offer document or the company's annual return, anyone who controls the company directly or indirectly, and anyone on whose advice the board is used to acting; a person acting only in a professional capacity is not one. The promoter group adds close relatives and connected entities. In an IPO, promoters must hold at least 20% of the post-issue capital, locked in for 18 months, or three years if most of the fresh money is for capital expenditure. Listed companies report promoter holdings, including any pledged shares, in their quarterly shareholding pattern.
Which rule asks for itRegulation 2(1)(oo) and (pp), and Regulations 14 and 16, SEBI (ICDR) Regulations, 2018; Section 2(69), Companies Act, 2013; Regulation 31, SEBI (LODR) Regulations, 2015.
Spot it in the wild
a real annual report, a real page
- The promoter and promoter group hold 54.5% of Sun Pharma.
- Ordinary individual investors together hold 8.5%.
Don't mix it up
the usual confusions
Promoter ≠ founder
A founder started the company. A promoter is a legal label for whoever controls it, which can be a founder, a family or a parent company.
Promoter ≠ managing director
The MD is a job: running the company day to day. A promoter is about control and ownership. Sameer happens to be both.
Promoter ≠ public shareholder
Everyone outside the promoter group, from mutual funds to Riya's mum, counts as public. Together they hold 40% of Sameer Chai.
Three quick sips
no sign-up, nothing saved
Hindi mein
प्रमोटर
प्रमोटर वह व्यक्ति या समूह है जिसने कंपनी शुरू की या जो उसे नियंत्रित करता है, आम तौर पर सबसे बड़ा शेयरधारक।