As you might have guessed by now, yes! I am new to the world of finance.

I have been going through a playlist on YouTube about investing in the stock market. And in one of the videos, I came across the topics "Family run business" and "Professionally managed business."

I understood what a family-run business is, as the term explains it clearly. But, even after googling for quite some time, I failed to compute what exactly a professionally managed business is and why the promotor holding of these business are always 0%? Let's take ITC Ltd. as an example.

  • 2
    It means a company run by professionals - i.e. people who are trained and skilled at running a business and do it as their main thing. Or a business run in a manner you expect from someone trained and skilled. Jan 3, 2023 at 11:28
  • @DJClayworth Can you please enlighten me on the difference between "Family run business" and "Professionally run business"? Jan 3, 2023 at 14:37
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    @ChinkySight what exactly are you confused about?
    – 0xFEE1DEAD
    Jan 3, 2023 at 15:08
  • 1
    The answer by 0xFEE1DEAD gives you the correct information. Jan 3, 2023 at 15:53

5 Answers 5


It would seem that 'promoter' is a uniquely Indian thing. Thanks to this OECD briefing note, I learn that

An important feature of the Indian ownership landscape is the presence of “promoters” and “non- promoters”. In principle, “promoters” denotes those persons that were instrumental at the time of establishing the company and those who are in control of the company, for example through shareholdings and/or their management position. “Non-promoters” refer to other shareholders, including minority shareholders.

In India, promoters play a significant role in listed companies. Since 2001, the average proportion of shareholdings by promoters has been stable around 50%. Such a dominance of promoters could indeed be detrimental to the interest of minority shareholders, if promoters pursue their own interests at the expense of the minority shareholders. However, if the conflict of interest is well controlled, promoters could also bring benefits to the company by serving as a visible and informed owner, overcoming the agency problem. The securities market regulator, SEBI, has also introduced policy measures with reference to promoters and corporate governance. One example is the requirement to maintain a minimum public shareholding, which would result in an adequate free-floating stock, as the tendency of promoters to hold a higher percentage of their shareholdings for a longer period could harm market liquidity. SEBI has also strengthened disclosure requirements to safeguard the interest of minority shareholders, including disclosure of pledging of promoters’ shares and protection of minority shareholders’ rights in related party transactions

Which explains why non-family-run businesses might typically have a 0% promoter holding.

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    Umm, I still didn't get how professionally managed company has 0% promoter holding. Can you explain in your own words please? Jan 4, 2023 at 14:28

This feels more like an English language than a personal finance question.

In a family-run business a founder or proprietor might enlist family members with varying qualifications (might have formal education/training or not) to help run the business. These people may or may not get paid.

In a professionally-run business, the owner(s)/shareholders hire executives/professionals/specialists to run the company and pay them for their skills/labor.

Note that a business can be both family owned and professionally run at the same time, there's no cut-and-dried distinction.

  • Why the promotor holdings of professionally managed business are always 0%? Jan 4, 2023 at 1:49
  • @ChinkySight what do you mean by promotor holdings and where do you see that?
    – 0xFEE1DEAD
    Jan 4, 2023 at 3:32
  • Promoter holding is the percentage of shares owned by the company's promoters. You can simple see it at the company's information page on any stock analysis site. E.g. ticker.finology.in/company/ITC Jan 4, 2023 at 3:52
  • @ChinkySight that appears to be specific to India, I wouldn't know. Also, I'd consider that a separate question.
    – 0xFEE1DEAD
    Jan 4, 2023 at 13:32

In the US, "professionally run" is a nearly content free phrase. It's intended to suggest "we are competent and responsible and reliable". At best it's a qualitative description of trustworthiness, when used to describe someone else's business. More often it just means "I couldn't think of anything good to say in our ad like boasting about number of years of experience or number of satisfied customers, so I'm waving my hands and hoping nobody notices."


Professionally Managed

This term is specific to the Indian business environment. It doesn't really make sense in isolation, only with respect to its alternative: the promoter-run business. A "promoter" is anyone with a controlling interest in the business, which generally means a significant shareholder. It quite often refers to founders, though a promoter does not need to be a founder. Although founders generally start as promoters, by necessity, they can sell their shares and otherwise transition out of the promoter role.

With this context, we can see that a "professionally managed" corporation is essentially one run by "hired guns", rather than the founders. This means that the C-suite is filled with people who are experts in managing a business, rather than people who are trying to execute a particular personal vision. Of course, the C-suite must execute on the vision provided by the promoters. But in a sense, they do this as a "professional service", rather than because they believe in the vision personally.

Promoter Holdings

The second part of your question is false. Promoters, on average, hold 50% of large corporations in India. If your premise were true, all of these corporations would be "promoter managed" rather than "professionally managed". In fact, many of these corporations are professionally managed. Take, for instance, Caprihans India, which is professionally managed. It had a whopping 75% promoter holding until 2023. Hindustan Unilever is another professionally managed company with 60% promoter holding. There are numerous other examples.


Zero promotors holding and professionally managed businesses mean that the promotors have no stakes right now. And the business is owned and managed by professionals.

  • 1
    What exactly is a promoter? Jan 4, 2023 at 7:24
  • 2
    The founders of the company.
    – Manish
    Jan 5, 2023 at 9:58

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