Regulator SEBI expands promoter definition for IPO-bound companies 

• For companies headed for an IPO, SEBI broadens the definition of a promoter to include the founders and their close relatives who possess 10% or more of the company.
• As per the present laws of SEBI, an individual who holds the power to choose the majority of directors, manages the company’s operations, or is specifically mentioned in an offer document is considered a promoter.

What the Norms Say

• Increased Meaning of Promoter: For businesses getting ready for an initial public offering (IPO), the term “promoter” has been enlarged. A promoter is a person who is listed in an offer document, has the authority to choose the majority of the directors, or manages the company’s operations.
• Previous Standards: Because of their ability to veto special resolutions and exert negative control, founders who own 25% of the company were previously considered promoters.
• The new criteria state that founders who own 10% or more of the company and who are directors or key management professionals (KMP) must register as promoters. Even if they only own 1% of the company, immediate relatives serving on the board of directors or KMP will be considered promoters.

About Declassification and 31A of LODR (Listing Obligations and Disclosure Requirements) Regulations

• Reclassification Difficulty: Declassifying a promoter as a public stakeholder is difficult because of the current restrictions.
• LODR Regulations Rule 31A: In order to be declassified, an individual and their family members cannot own more than 10% of the listed company.
• Restrictive Nature: Married daughters who do not play an active role in the company face particular difficulties in declassifying their immediate relatives who are automatically classed as promoters due to their relationship.

Issue Over Subjective Definition

• Subjectivity of Promoter Definition: Historically, there have been differing interpretations and legal problems resulting from the subjective nature of the promoter definition.
• Court Decisions: A number of court decisions have addressed the arbitrary definition of a promoter, exposing contradictions and ambiguities.
• Complex Criteria: Accounting rules and regulatory standards are frequently intricate and subject to various interpretations when assessing control and influence within a corporation.
• Experts think that a more objective test is necessary to determine control and promoter status since it would result in more precise guidelines and fewer conflicts.

Way forward:

• Standardized rules: Create precise, uniform rules that minimize subjectivity and guarantee consistency when identifying promoters.
• Require corporations to provide comprehensive disclosures about their promoters, including information about their roles, shareholding patterns, and decision-making influence.

In the light of Satyam Scandal (2009), discuss the changes brought in corporate governance to ensure transparency and accountability. (2015)

The representation of women in the incoming Lok Sabha, how it compares to previous years

Why in the news?

• There has been a general trend over time to increase the number of women in the Lok Sabha. On the other hand, the progress has been uneven and slow.
• Number of Women MPs: Four less than in 2019, India elected 74 women MPs to the Lok Sabha in 2024.
• As a percentage of representation, women’s MPs only account for 13.63% of the Lower House’s elected membership.
• Party-wise Distribution: There are fourteen parties represented by women MPs. The BJP has the most, with thirty-one, followed by the Congress with thirteen.

Different Demographic Observations:

• Trend in Representation: The number of women in the Lok Sabha has been slowly but steadily increasing over time.
• Historical Trends: In 1952, women’s representation was at 4.41%, and in 2019, it reached a height of 14.36%.
• New Faces: Of the 74 elected women MPs, 43 are first-time lawmakers, suggesting a greater proportion of new members than in the House as a whole.
• Reduced Representation: Women MPs are 50 years old on average, which is less than the 56-year-old House average.

Comparative Analysis with Other Nations:

• Comparing India to other nations, the US, UK, and South Africa have larger percentages of female MPs than India does. India also trails behind several other countries in terms of women’s representation.
• Global Rankings: Women make up 46% of MPs in South Africa, 35% in the UK, and 29% in the US.

Way forward:

• Increasing Representation: In order to attain gender parity, more work must be done to increase the number of women serving in the Lok Sabha.
• Implementing policy measures, such as allocating seats in the Lok Sabha to women, could enhance representation.
• Encouraging Participation: More representation can be achieved by supporting the political careers of women and encouraging more of them to enter politics.
• Education and Awareness: In order to create a more welcoming political atmosphere, it is crucial to promote education and awareness on the significance of gender equality in politics.

What are the continued challenges for Women in India against time and space?  (2019)

Second Phase of China-Pakistan Economic Corridor (CPEC)

The prime minister of Pakistan is in Beijing for the official launch of the second phase of the China-Pakistan Economic Corridor (CPEC-II).

About CPEC-II

• The second phase of the CPEC will concentrate on areas other than infrastructure and energy, such as agriculture, the realignment of the Karakorum Highway, and the renovation of Pakistan Railways’ Main Line-I (ML-1).
• As a component of President Xi Jinping’s Belt and Road Initiative (BRI), CPEC was launched in 2015.

India’s Concerns

• India raises concerns about sovereignty as the China-Pakistan Economic Corridor (CPEC) passes through Pakistan-occupied Kashmir (PoK), raising issues with territorial sovereignty and possibly strengthening Pakistan’s claim to the area.
• Geopolitical Implications: China’s “String of Pearls” is being extended around India with the CPEC’s expansion of Gwadar Port, raising questions about the balance of power in the area.

CPEC’s Progress so Far

• Mixed Results: While progress has been uneven, the first phase of CPEC mainly focused on port, energy, and infrastructure development projects.
• Project Status: Special Economic Zones (SEZs) and transportation-related projects continue to face major delays and difficulties, despite the completion of a number of power projects.

Challenges and Roadblocks

• Slow pace: Gwadar lacks basic amenities like dependable access to electricity and water, let alone other facilities, even in the midst of multibillion-dollar developments.
• Another obstacle to the project that has halted is the Baloch liberation movement, which calls for the killing of Chinese officials.
• Persistent security threat: Pakistan has objected to China’s plans to use its Army in the CPEC projects.

GREEDFLATION

According to a research, “greedflation” was mostly responsible for the spike in US inflation last year, even if corporate earnings are still at record highs.

Context:

• According to the paper, since the beginning of the epidemic, corporate profits have been responsible for almost one-third of inflation, and 53% of it during the second and third quarters of 2023.

Inflation: What is it?

• First of all, the rate of increase in the general price level is known as inflation, or the inflation rate. The general price level of the economy (as determined by a representative basket of goods and services) was presumably 5% higher in June 2022 than it was in June 2022 when the inflation rate of 5% is announced.

What causes inflation?

• There are essentially two primary mechanisms via which inflation occurs. Prices either rise as a result of rising input costs (a phenomenon known as cost-push inflation) or rise as a result of surplus demand (a phenomenon known as demand-pull inflation).

The wage-price spiral: what is it?

• It makes sense that workers would demand higher pay if prices rise. Raising wages, however, has little effect on increasing supply; rather, they merely serve to increase demand overall. As a result, inflation increases even more because a worker’s coworker also has more money. The price of the good is the only thing that changes when they go to the market; inflation increases.

What is Greedflation

• Greedflation refers to the simple fact that corporate greed is driving inflation. Put another way, the profit-price spiral is at work rather than the wage-price spiral.
• Greedflation essentially suggests that businesses raised prices far above what was necessary to cover their increasing costs in order to take advantage of the inflation that consumers were experiencing and maximize their profit margins. Consequently, inflation was fueled even more.
• There is increasing agreement in the developed world, particularly in the US and Europe, that greedflation is the true culprit.