The governance imperative

In new-age companies with no promoters, institutional investors have a crucial role in shaping the board

promoters, investors, market

Illustration: Binay Sinha

Akash Prakash
Historically, for public market investors, it has been a straightforward exercise when assessing the governance and board dynamics of listed companies. The majority of these companies had a single large shareholder (the promoter), who held the largest block of shares, typically between 35 and 55 per cent of the equity.

The promoter would either directly be involved in management or appoint professionals, and they would have a major say at the board. Even with an independent board, as required by the regulator, most director nominations would be supported by the promoter group, and they would be elected unopposed. The mantra was clear: With their permanent and large shareholding, promoters exercised huge influence over the board and management of the company. You
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of or the Business Standard newspaper

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First Published: Nov 20 2023 | 10:10 PM IST

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