SEBI wants to shake up how IPO 'promoters' are defined
SEBI is looking to update the rules for who gets called a "promoter" when companies go public.
The goal? Make sure companies clearly explain why certain people are listed as promoters, so investors aren't left guessing or misled by former founders with tiny stakes.
Focus shifts from shareholding to real control
Instead of just checking if someone owns 15% of voting rights, SEBI's new approach zeroes in on who actually calls the shots and has real influence over the company.
Companies will need to name their true decision-makers (significant beneficial owners) and explain if they're not being labeled as promoters.
Plus, they'll have to confirm there aren't any secret control deals happening behind the scenes.
Why this matters: More transparency for everyone
Right now, there's no standard way to decide who counts as a promoter—it's up to lead managers, which leads to mixed signals in IPO paperwork.
SEBI's changes aim to make disclosures clearer and responsibilities fairer, especially in cases where private equity firms run things but don't show up as official promoters.
This should help investors trust what they see when a company goes public.