SEBI issued a consultation paper on May 11, 2021, for public comments, on the review of the regulatory framework of promoter, promoter group and group companies as per the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 (‘ICDR Regulations’). Through the consultation paper, SEBI has proposed and sought comments from the public on the following:

i.     reduction of the lock-in-periods for public issuances on the main board of the stock exchanges, as follows:

ii.   Deletion of the concept of ‘promoter group’ from the ICDR Regulations;

iii.  Streamlining the disclosure of ‘group companies’, by restricting such disclosure solely to the name of the group company and the address of its registered office. All other current disclosure requirements, like financials of top five group companies, litigation, etc., is proposed to be deleted. However, these disclosures are proposed to be made available on the websites of the issuer company; and

iv.   Progressive shift from the concept of ‘promoter’ to the concept of ‘person in control’ or ‘controlling shareholders’, which would, amongst other things, entail changes across several SEBI regulations. The rationale provided for this proposed shift is: (a) the changing nature of ownership of listed entities; (b) increased focus on the quality of board of directors and management; and (c) the limited utility of identification of promoter group.