# Promoter — Section 2(69)

A promoter is a person identified by any one of these three tests:

Test	What it captures
(a) Named test	A person named as promoter in the prospectus or identified as such in the company's annual return under Section 92.
(b) Control test	A person who has control over the affairs of the company, directly or indirectly, whether as shareholder, director or otherwise.
(c) Shadow test	A person on whose advice, directions or instructions the Board is accustomed to act. Excludes a person acting merely in a professional capacity.

## General (judicial) meaning — useful for theory questions

A promoter undertakes to form a company with respect to a given project and to set it going, taking the necessary steps for incorporation.
He need not be associated with the initial formation — even one who later helps arrange the floating of capital is a promoter.
Hence, 'promoter' includes any individual, association, partnership or company taking steps to incorporate a company and set it going — and stands in a fiduciary position to the company.

## Important distinctions

A promoter is not an agent of the company before incorporation (because the company doesn't yet exist), but he is in a fiduciary relationship.
The 'professional capacity' carve-out under test (c) protects CAs, lawyers, CS and similar professionals — they don't become promoters merely by advising the Board.

## Practical illustration

As noted in the source: Reliance Industries Ltd currently lists approximately 46 shareholders identified as promoters or part of the promoter group in its annual return — a real-world application of test (a).

Worked example

### Example 1

Example 1 — Control test. Mr. P holds 70% equity in QR Ltd through a chain of shell companies. He is not a director and is not named anywhere in the prospectus. Is he a promoter? Yes — under test (b), control 'directly or indirectly, whether as a shareholder...or otherwise'.

### Example 2

Example 2 — Shadow test. Mr. S is a 'godfather' of a corporate group. The Board takes every major decision based on his oral instructions. He holds no shares and no office. Promoter? Yes — test (c). But if he had only given professional legal advice as a retained counsel, he would NOT be a promoter.

⚠️ Common exam mistakes

Restricting the definition to people involved in the initial incorporation. Anyone who later helps float capital can also be a promoter.
Ignoring the indirect-control angle of test (b) — a person controlling via nominees or holding companies is still a promoter.
Forgetting the professional-capacity exception under test (c).
Treating 'promoter' as synonymous with 'founder' or 'first subscriber' — the statutory definition is broader.

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

Promoter means a person: (a) who has been named as such in a prospectus or is identified by the company in the annual return under Section 92; (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 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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Promoter [Sec 2(69)]

Worked example

⚠️ Common exam mistakes