Promoters Missing At The Markets

When start-ups launch IPOs, their founders abruptly change their classification from promoters to public shareholders. SEBI worries about its impact on public confidence, but the trend is all pervasive

In May 2021, the Securities and Exchange Board of India (SEBI) proposed to revisit the definition of promoters in a company that wanted to hit the bourses. Widely seen as a move targeted at start-ups wanting to raise public money after their private-investor-led run has peaked, SEBI asked founders with over 10% stake in the company to declare themselves as promoters. Since then, many media reports have emerged stating that the market regulator informally nudged founders to adopt this practice.