PROMOTERS AND CORPORATE GOVERNANCE UNDER THE COMPANIES ACT, 2013 AND ALLIED ACTS IN INDIA

Abstract

The term ‘promoter’ has been a term of frequent occurrence in company matters in India. The Indian Companies Act, 1956 used the term to fix liability on promoters but did not define it and accepted their established position under the Common law principles. The Securities and Exchange Board of India, however, defined the term ‘promoter’ in its Regulations. The Indian Companies Act, 2013 has defined the term for the first time. The author has proposed this study to know how the definition of the term ‘promoter’ has evolved, what is the role of promoters in corporate governance, how duties of promoters have been enlarged from time to time and how obligations have been placed on them in order to increase their accountability. The author will trace the evolution of the term from the period when it was said that the term ‘promoter’ has no definite meaning1 or has never been clearly defined either judicially or legislatively2 or was defined in terms of duties performed by them or the definition was kept flexible to bring only those under strict duties who will fulfil the functional concept of the definition.3