Review of the regulatory framework of promoter, promoter group and group companies as per SEBI (ICDR), Regulations

Last updated: 12 May 2021

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The Securities and Exchange Board of India (SEBI) has released a consultation paper to gather public feedback on proposed changes to the regulatory framework for promoters, promoter groups, and group companies under the ICDR Regulations. Key areas under review include reducing lock-in periods for shareholders, rationalising the definition of 'promoter group', streamlining disclosures for group companies, and potentially shifting from the concept of 'promoter' to 'person in control'. SEBI aims to balance investor protection with ease of doing business.

Securities and Exchange Board of India Consultation Paper on Review of the regulatory framework of promoter, promoter group and group companies as perSecurities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 I.Objective 1) The objective of this consultation paper is to seek comments / views from the public on the following relating to Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 (ICD

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FAQ :

The main objective is to seek public comments on proposed changes to the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, concerning promoters, promoter groups, and group companies. This includes reducing lock-in periods, rationalising definitions, streamlining disclosures, and shifting the concept from 'promoter' to 'person in control'.

It is proposed to reduce the lock-in period for minimum promoter's contribution to one year (from three years) for certain issues. Promoter holdings exceeding the minimum contribution would have a six-month lock-in, and pre-issue capital held by non-promoters would also have a six-month lock-in, down from the current one year.

The proposal is to remove entities specified under Regulation 2(1)(pp)(iii)(c) of the ICDR Regulations from the definition of 'promoter group'. This aims to rationalise disclosure burdens by removing the capture of unrelated companies with common financial investors.

The proposal suggests disclosing only the names and registered office addresses of all Group Companies in the Offer Document. Other detailed disclosures like financials of top companies and litigation would be removed from the offer document but may continue on company websites.

This shift is being considered due to changes in ownership structures, with increased influence of private equity and institutional investors. The current 'promoter' definition may not accurately reflect control in modern corporate landscapes, and a 'person in control' concept could better align with corporate governance focus on boards and management.

Public comments can be submitted via email to Ms. Komal Bais at komalb@sebi.gov.in or by post/email to Ms. Yogita Jadhav at SEBI Bhavan, Mumbai. The subject line should be 'Comments to Consultation Paper on Review of the regulatory framework of promoter, promoter group and group companies as per Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018'. The deadline for comments is June 10, 2021.