# Promoter [Sec. 2(69)]

A promoter is the person(s) who conceives the idea of forming a company and takes the necessary steps to bring it into existence.

## Statutory Definition

A promoter is a person who:

1. Is named as a promoter in the company's prospectus OR is identified in the annual return referred to in Sec. 92; OR

2. Exercises control over the company's affairs — directly or indirectly — whether as a shareholder, director, or otherwise; OR

3. Provides advice, directions, or instructions in accordance with which the Board of Directors is accustomed to act.

### One of the three is enough — they are alternatives.

## Exclusion

A person acting solely in a professional capacity (e.g., solicitor, banker, accountant, CA, CS, CMA) is NOT regarded as a promoter, even if they assist in formation.

## Key Characteristics

A promoter may be an individual, firm, association of persons, or a company.
They occupy a fiduciary position — must act in trust toward the company.
A person need not be involved from the very beginning to be classified as a promoter — later involvement leading to control is enough.
The role is functional: it depends on what the person does, not on how they style themselves.

Worked example

### Example 1

Example 1 — Named promoter: Mr. A is named in the company's prospectus as a promoter. → He is a promoter under Sec. 2(69)(a), regardless of his actual role.

### Example 2

Example 2 — Control test: Ms. B holds only 5% shares, is not a director, but the Board acts according to her instructions consistently. → She is a promoter under Sec. 2(69)(c).

### Example 3

Example 3 — Professional capacity exclusion: A Chartered Accountant assists in drafting the MOA, advises on incorporation, and files SPICe+ forms. → He is not a promoter — exclusion applies as he acts purely in professional capacity.

### Example 4

Example 4 — Company as promoter: PQR Holdings Ltd sets up a new subsidiary, ABC Ltd, and is named as promoter. → A body corporate can be a promoter.

⚠️ Common exam mistakes

Treating a CA / CS / lawyer who assisted with incorporation as a 'promoter' — they are excluded if acting purely in professional capacity.
Assuming only individuals can be promoters — firms and companies can also be promoters.
Believing one must be involved 'from day one' to be a promoter — control or instructions exercised later are sufficient.
Confusing 'promoter' with 'subscriber to MOA' or 'first director' — they may overlap but are distinct roles.

Bare-Act text Sec. 2(69) · Companies Act, 2013 · click to expand

Sec. 2(69) — 'promoter' means a person — (a) who has been named as such in a prospectus or is identified by the company in the annual return referred to in section 92; or (b) who has control over the affairs of the company, directly or indirectly whether as a shareholder, director or otherwise; or (c) in accordance with whose advice, directions or instructions the Board of Directors of the company is accustomed to act: Provided that nothing in sub-clause (c) shall apply to a person who is acting merely in a professional capacity.

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