In a notification issued on Monday, Sebi has also broadened the definition of "promoters", in the context of the Takeover Code, beyond dominant shareholders to include persons or entities in control.

It has also said if a global merger and acquisition resulted in the promoter holding going over 75 per cent, the promoters would have to bring down their holding to 55 per cent in a year.

Thus, entities that come under the new definition of promoters can avail themselves of the benefit of not having to make an open offer when making inter-se transfer of shares, but they will have to comply with the stricter disclosure requirements that go with the promoter category.

Corporate lawyers have welcomed the changes, saying they will facilitate re-arrangements within family-owned conglomerates.

Akil Hirani, managing partner, Majumder & Company, said, "It allows for a whole lot of promoters to take the exemption route because the definition of promoter has been considerably widened. We could see family-owned business going in for re-arrangements," he said.

Ranganath Char of Enam Financial Consultants Pvt Ltd said, "There is a progressive merger of 'promoter' with a person in 'control'."

Incidentally, for the first time, public shareholding excludes promoters' holdings for classification purposes under the Takeover Code.

However, the amendments still leave some ground for ambiguity as they talk only about control of the holding companies and the subsidiaries and do not touch upon the entities behind such control.

Under the amendments, a promoter will mean "any person who is directly or indirectly in control of the company, any person named as promoter in any document for offer of securities to the public or existing shareholders or in the shareholding pattern disclosed by the company under the provisions of the listing agreement and any person named as person acting in concert with the promoter in any disclosure made in terms of the listing agreement".

The scope has been widened to include any individual, spouse, parents, brothers, sisters or children and any company in which 26 per cent or more of the equity share capital is held by the promoter and by persons acting in concert.

The promoter will also include any company in which a company holds more than 50 per cent, any firm in which the aggregate of his holding and the holdings of the persons is more than 50 per cent. A similar definition will apply to the promoter being a corporate body.

Meanwhile, it is expected that Sebi will give promoters around a year's time to comply with the regulations of the listing agreement where the non-promoter holding has to be maintained at 25 per cent.

Sebi has also amended the Takeover Code to prohibit creeping acquisition beyond 55 per cent. Any acquisition of shares over this limit can be done only through a public offer.

Win some, lose some

• Sebi expands the definition of 'promoter', to include all persons in control of a firm

What it means

• All such persons get the benefit of exemptions under the Takeover Code when making inter-se transfers

How will it help?

• Consolidation of stake will be easier. Family-owned companies could see a lot of rearrangement of holdings

What are the pitfalls?

• All entities under the revised definition of promoter will have to follow the disclosure norms
• Promoters will have to reduce their stake to below 55% within one year if their holdings exceed 75%, as per the revised definition