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Since the promotors are the ones who make the initial investment and take the initial risk, they are offered certain rights that normal shareholders do not enjoy. For eg, as you might have noticed, most of the Board members are from promotors group, and understandably so because this encourages initial investment and' arguably, entrepreneurship as well. So the differentiation is there for a reason.

For returns point of view for long term investor, both the shares should be the same. One might also argue that the promotor share should cost more because of the added value, but then again, the price is determined by the market. To be honest, I am a bit surprised that promotors share cost less - and not more - than ordinary shares in our market.

This should answer the initial issue.

Now about the influence of Board on Management, if both sides followed the written policy in a disciplined way, bananking industry in Nepak would be in a far better shape than it is now. It is easy to point your fingers to the Promotors but the Management/CEOs in most banks are equally to be blamed because most CEOs would do exactly what a Board member/Chairman tells him/her to do instead of following set guidelines and using proper judgement. The case of ex MD of KIST Bank is just the tip of the iceberg.

Seedmoney ji has expressed his opinion about promoter share in ther thread
"Dear ivestors, Its Selling Time (Have patience to read it)"
as
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Dear Ramen Bro,

your view is philisophically correct.. But i have the opinion otherway round..
BFI are promoted by investors so called promotor and the share hold by them is promoto share. The supreme body of the BFIs is Board of Director.. The person in Board is of course a Promotor as well.. As u said, promotor can't involve in the management, but the promotor who is in Board has great influence in the management... Not only that promotor in Board but those all who falls in his pannel.. There is huge politics in the combination of Board of a BFI having 7 crore paid up capital, what would be a situation in a billion Bank.. These things wont come in market or news, so we assume that management in independent but influenced by promotors indirectly..
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In my observation BOD of a public company is formed from the representatives of its investors (both promoters and and general share holders) in the proportion of their investment.
Of course board is dominated by representatives from promoter group and it is mainly due to their ratio of stakes in the company (normally 70% promoter share against 30% general public shares)
Naturally If the proportion of General public share is more than promoter share, BOD will be dominated from the representative from general public shareholders.

And of course the management of the company is influenced by BOD and I personally think it should be too otherwise there is no use of investing in or promoting the company. But not all promoters and general share holders can influence the management .

I do not understand why the regulators differentiate between Promoter Share and General Public Share once the lock in period for the company is over.

From the point of view of an investor both shares yields same return.
Further in BFIs, except one, none other promoters can participate in their management ?

Still regulators as well as general investors treats differently on Promter Share and General Public Share ???

Since both share yields same return, should there be any differences between Promoter Share and General Public Share in secondary market so far the share holder is not in Board as well as in Management?


Your views will be highly appreciated