SEBI PERSON IN CONTROL CONCEPT

SEBI PERSON IN CONTROL CONCEPT

Subject: Governance

Context: Recently, the Securities and Exchange Board of India (SEBI) has proposed doing away with the concept of promoters and moving to ‘person in control.

Concept:

• It has also suggested reducing the minimum lock-in periods post a public issue for promoters and pre-IPO shareholders.
• The consultation paper suggested that a three-year transition period for moving from the promoter to person in control concept.
• The SEBI has proposed that if the target of the problem includes provide on the market or financing aside from for capital expenditure for a challenge, then the minimal promoters’ contribution of 20% must be locked-in for one year from the date of allotment.
• The promoters’ holding in excess of minimum promoters’ contribution shall be locked in for a period of six months as opposed to the existing requirement of one year from the date of allotment in the IPO.

What is person in control concept?

• Control Person means any person that holds a sufficient number of any of the securities of an issuer so as to affect materially the control of that issuer, or that holds more than 20% of the outstanding voting securities of an issuer.
• Control Person means any individual who has a Control relationship with the Fund or an investment adviser of the Fund.
• Control Person means a director or executive officer of a licensee or a person who has the authority to participate in the direction, directly or indirectly through 1 or more other persons, of the management or policies of a licensee.