Rapido IPO Preparation: Founders Shed Promoter Tags for Leaner Public Compliance

Rapido’s co-founders, Aravind Sanka, Pavan Guntupalli and Rishikesh S R, have given up their promoter status ahead of the company’s planned initial public offering, Mint reported. The move is aimed at easing compliance requirements once the ride-hailing platform is listed. The trend of founders shedding their promoter tag has gained traction among new-age companies, as non-promoter status can reduce compliance obligations post-listing. It may also allow for more flexible board composition and smoother approval of executive compensation. The reclassification is part of Rapido’s preparations for a proposed IPO in FY27. “The company will soon start its IPO process and hire bankers,” an investor told Mint. Board’s Approval In a December 16 letter to the Registrar of Companies, the board said that while the co-founders were classified as promoters during the company’s early stages, Rapido has since evolved into a professionally managed organisation. “Since then, and as the Company has grown and progressed, it is now professionally managed, with the board of directors of the Company offering guidance from time to time,” the letter stated. The board approved the reclassification after reportedly considering that none of the co-founders holds more than 10% of the company’s total voting rights, that they do not exercise control over the company’s affairs, and that they do not enjoy any special rights through formal or informal arrangements. The company’s operations and compliance processes are now reportedly run in a manner similar to any established corporate entity. Impact on Board According to Gaurav Pingle, a company secretary quoted by Mint, the shift from promoter to non-promoter status can significantly affect board structure and compensation rules. If a non-promoter, non-executive director serves as chairperson, only one-third of the board needs to comprise independent directors. However, if a promoter or executive chairs the board, at least half the directors must be independent. Promoter status also reportedly requires that founders’ compensation be ratified by minority shareholders, adding scrutiny and uncertainty. Promoters must additionally disclose details of any shares they have pledged or encumbered, a requirement that does not apply to non-promoters.