The term Promoter is defined as a person who comes first in the chronological order in the process of incorporation of a company. The Promoters of the company are like parents of the company as they incorporate the company. Promoters are deeply involved in the incorporation process and almost does everything for incorporating a company. For Formation of a company the work-related with compliance of laws, regulators and authorities which involves integrated teamwork by various people are led by promoters. The Company is a mode of doing business which is runs and motives the profit maximization. The person who generally brings the company into existence. The promoter is the person who has an interest in an enterprise, aids in procuring subscription, the person who set the machinery into motion. The promoter is the person who complies with the necessary formalities of the company registration, finds directors and shareholders for the new company, acquires business assets for use by the company and help the company in earning a long term profit and ensures the growth of the company. The promoter also negotiates in the business contracts on behalf of the company. To be regarded as a promoter, the person does not need to be involved in every stage of the company’s formation. The term has been recognised in the prospectus and the person is known as promoters.

The legislative provision provided to define the term promoter under companies Act 2013 and SEBI (Issue of Capital and Disclosure requirement Regulation 2019).

The Companies Act, 2013 under section 62(2) defines the term promoter that the following persons shall be treated as promoters:

1. The person whose name is appearing as a promoter in the prospectus or annual return or
2.  The person Who has directly or indirectly has the control over affairs of the company either as a shareholder, director or otherwise or
3.  A person under whose advice, directions or instruction the board of directors of the company is accustomed to act.

However, it excludes a person who is acting merely in a professional capacity. This definition is exhaustive. However, it does not take into account the well-recognized function of promoting the company.

According to SEBI (Issue of Capital and Disclosure requirement Regulation 2019) defines the term promoter

1. A person or persons who are in control of the issuer
2. the person or persons who art instrumental in the formulation of plan or program according to which specified securities are offered to the public
3. The person or the persons named in the offer document are promoters