Promoter

Who are Promoters?

Promoters are the single person or the group of people who form a company or who play a very important role in establishing it. They are usually founders, their immediate family members, or original investors with high interest in the success of the company.

Role of Promoters

Promoters are the ones who convert an idea into a viable business. They provide the initial capital, form the company, and sometimes also take up leadership positions like being on the board or management team. Their leadership and vision typically determine the direction of the business in the early years.

Types of Promoters

• Individual Promoters – Founders or key individuals behind the company.

• Corporate Promoters – Firms which promote other companies.

• Institutional Promoters – Financial institutions or banks engaged in business establishment.

Promoters vs. Shareholders

While all promoters are shareholders, not all shareholders are promoters. Promoters are generally involved in managing or operating the business, but shareholders might just provide money without being included in daily operations.

Why Promoters Matter to Investors?

Investors hold the percentage of shares held by promoters (promoter holding) as an indicator of trust. The more the promoters hold shares in the company, the more they are confident in its future prospects and the higher the loss they will incur if anything goes wrong.