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Tuesday, Nov 09, 2004

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Call for clarity in definition of promoter

Our Bureau

New Delhi , Nov. 8

THE PHDCCI has called for harmony in the definition of `promoter' as defined in the concept paper for new company law and that under the SEBI Takeover Code.

In a representation to the Ministry of Company Affairs, the PHDCCI has said promoter has been defined as person having control over the affairs of the company directly or indirectly and includes any person named as promoters in any offer document of securities.

While this definition in the concept paper has been drawn from SEBI Takeover Code, in the Takeover Code, the emphasis is on the term `control', which is not the case in the concept paper. While defining `promoter', the term `control' may also be defined in the Act itself. Secondly, the definition, while excluding "person acting in professional capacity" does not clearly bring out whether directors acting in professional capacity, such as the independent directors, are excluded, the chamber said.

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