Introduction
India is a country where the business world is clearly divided into the model of concentrated ownership. The evidence of this ownership structure is in fact that a large part of company owners’ equity is concentrated in a single person, a family or a closely knit group of associates. A lot of them are still influential founders and key shareholders who impose a great effect over the strategic outlook and management policy of their companies. The dominant form of ownership that characterizes these companies does not only influence the strategies they adopt but also the Indian market economy as a whole.
This takes the form of the concentrated ownership of voting shares, in this way a given percentage of board voting rights lies in the hands of one, or maybe, a small number of shareholders. Usually, the owners and managers are not the investors who are not geographically far from the business but are involved normally by family ties or are corporate executives that are actively engaged in the managing and planning of the company’s future. In the Indian corporate context, these influential shareholders are called ‘promoters’ which is a legal classification of shareholders. This position is not of a symbolic kind. It is rather a formal declaration of the company’s recognition of their valuable contribution. They are seen as a key staff needed not only for the beginning of the company but also its ongoing governance. Promoters are implicated in greater than financing. They also play active part in management operations as well as fundamental decisions that are related to long-term strategy.[1]
[1] Nashier T and Gupta A, “Ownership Concentration and Firm Performance in India” (2020) 24 Global Business Review 353 <http://dx.doi.org/10.1177/0972150919894395>.