18763_L8 - Promoter.ppt

PROMOTER

WHO IS A PROMOTER

• PERSON WHO CONCEIVE THE IDEA OF THE COMPANY & TRANSLATE IT INTO A WORKING REALITY.

• PROMOTER IS A PERSON WHO ASSEMBLES THE MEN MONEY & MATERIAL INTO A GOING CONCERN.

FUNCTIONS• Planning the formation• Considering prestart problems• Selecting first directors & fulfilling obligations

complying them.• Selecting name ,& defining company’s activity &

capital.• Selecting the bankers• Preparing prospectus , articles• Getting the certificate of incorporation.• Meeting initial expenses• Issuing shares debentures , getting minimum

subscription• Getting certificate of commencement.

Legal position of promoter• Fiduciary relationship

• Trust & confidence

• Conditions– Not to make any secret Profit– Not to earn profits on personal assets.– To give benefit of negotiations to the company– Not to make unfair use of position– Duty as to prospectus

Remuneration to promoters

• cash• Option to purchase shares• Partly in cash , partly in shares & debentures• Commission

Pre-incorporation/preliminary contracts• Contracts entered into by the promoter before

the incorporation.• Company not bound by pre incorporation

contracts• Company cannot enforce pre incorporation

contract• Promoters personally liable• Ratification of a pre-incorporation contract• Specific performance of pre-incorporation

contract.