Alice Synopsis

7/17/2019 Alice Synopsis

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THE ROLE OF PROMOTER IN THE REGISTRATION

OF THE COMPANY

SYNOPSIS FOR THE SUBJECT CORPORATE LAW

Submitted To: Submitted By:

Asstt. Proff. Anushmita Chanda Alice Raj

Galgotias University

B.A.LLB(H)



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SYNOPSIS

Topic of the Research:

The paper is proposed to be written on the topic “The role of promoter in the registration of the

company”

An Overview of the Topic:

Promoters are the persons who promote. They are involved in the form or float of the company.

The promotion of a company means taking necessary steps towards the incorporation of a

company. Promotion is described as a matter of operations familiar to the commercial world by

which company is brought into existence. Promoter has a fiduciary position in relation to the

company to be incorporated.

Area of the Research Topic:

The topic will come under the purview of company law It will cove section 2(69) company act

2013 and the others related to it and duties and role of promoter.

Preliminary Literature survey:

For the purpose of research preliminary literature survey has to be done by taking help of various

Books, Articles.



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FOREWORD ON THE RESE RCH

Significance of the Research:

This present research paper will include the role of promoter in the registration of company and

the duties of promoter. There may be certain cases where there is breach of duty. In this kind of

situation the relief available under law ha to be taken and the precedent of such cases has to

taken into consideration.

RESE RCH OBJECTIVES

To define the term promoter.

To examine critically the role of promoter in the registration of the company

To understand and evaluate the duties and liability of the promoter?

RE SE RCH QUESTIONS

Who are promoters? What is their significance?

Is the person acting under professional capacity is a promoter?

What are the functions of promoter?

What are pre-contractual and post contractual obligation with respect to status duties and

liabilities?

What is the position of promoter after the incorporation of the company?

What is the duty of the promoter?

What are the liabilities imposed on breach of such duties?

Whether the company is entitled to pay for pre incorporation contract?

What are the reliefs provided under provisions of law?



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RESE RCH METHODOLOGY

Hypothesis:

It is known that the role of promoter is to form or float the company. They are bound to disclose

their interest and profit. The breach of such duties leads to personal liability even after the

incorporation.

Research Techniques:

This research will be based on secondary sources suchThe study involves all the three categories

of research methodologies including analytical, descriptive as well as historical

Research Sources:

This research will be based on secondary sources such as various Books, Articles, Journals, Newspapers

Case studies and Comments.



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Proposed CH PTERIZ TIOn

TITLE

ACKNOWLEDGEMENT

PREFACE

CHAPTER-I: INTRODUCTION

As per clause 69 of section 2 promoter means a person

who has been named in prospectus or identified in the annual return referred to insection 92 by the company .

who has the control over the affairs of the company , directly or indirectly,

whether as a share holder , director or otherwise.

in accordance with whose advice , direction or instruction board of director is

accustomed to the act. The proviso exclude people working in professional

capacity.

Promoter occupies fiduciary position in relation to the company to be

incorporated. The role of promoter is-

1. To prepare basic document like memorandum of association and

articles of association.

2. To frame and issue prospectus

3. To receive and handle funds

4. To issue shares

5. To enter into pre- incorporation contracts

which concludes to do everything necessary for the incorporation

of the company.

The duty of promoter is to disclose his profit and interest. The

promoter must disclose all material facts and should not make any

secret profit at the cost of the company.



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CHAPTER-II: PROMOTER

This chapter will deal with the term promoter. It will be followed by two subchapters.

1.1 Meaning

1.2

Definition

1.3 Types of promoter

CHAPTER-III: FUNCTIONS OF PROMOTER

In this chapter the role of promoter in the incorporation of company will be taken into

consideration.

CHAPTER-IV: DUTIES OF THE PROMOTER

In the given chapter duties of promoter will be discussed.

CHAPTER V: POSITION OF PRE INCORPRATION CONTRACT

This chapter will discuss about the contracts of the company before its registration and the role

of promoter in such in contracts.

CHAPTER-VI: LIABLITIES

Here we will discuss about the liabilities impose on promoter on breach of his duties.

CHAPER-VII: CONCLUSION

We will conclude our research in the following chapter.



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LITER TURE SURVEY

Case study I:

In Gluckstein vs. Barnes,a syndicate of persons was formed to purchase the Olympia Company

and to promote and register a company to which the Olympia property was to be resold. At that

time the Olympia Company was in a bad shape. The syndicate first bought the debentures of the

Olympia Company at a discount. Then they brought the Company for £ 1,40,000. Out of this

money, provided by them, the debentures were repaid in full and a profit of £ 20,000 was made

thereon. They promoted a new company and sold Olympia to it for £ 1,80,000. The profit of

40,000 was revealed in the, prospectus, but not the profit of £ 20,000. It was held that the profit

of £ 20,000 was a secret profit made by the syndicate as promoters of the company, and they

were bound to pay it to the company which was at that time in liquidation. On behalf of thesyndicate it was argued that they had in fact made a proper disclosure, but it was turned down on

the plea that disclosure made by them in the capacity of vendors to themselves in the capacity of

directors of the purchasing company was not sufficient. The disclosure ought to be to an

independent Board or to all shareholders by means of a prospectus.

Case study II:

In Erlanger v/s New sombrero phosphate co a group of persons headed by B purchased an isla nd

containing phosphate mines for 55,000 euro. A company was then incorporated to take over

mines . B named 5 person as a director out of which two were in abroad and 2 out of three were

in his control. The director purchased the island from B at the cost 1,10,000 euro. In the meeting

the purchase of the island was adopted by the promoter but didn’t disclose about the real

circumstances. The company failed and the liquidator sued the promoter for refund of profit. The

promoter was bound to pay .

Case study III:

In re English and colonial Produce Company case[xxiv], a solicitor was engaged to prepare the

necessary documents and obtain the registration of a company. He paid the registration fee and

http://www.lawctopus.com/academike/position-promoter-india-critical-analysis/#_edn24






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incurred the certain expenses incidental to registration. It was held in this case that the company

was not liable or bound to pay for his services and expenses.

Case study IV:

Natal land and colonisation company v. pauline colliery syndicat e[xxv]that the syndicate was

not entitled to its claim as it was not in existence when the contract was made and a company

cannot obtain the benefit of a pre-incorporation contract in the suit of specific performance. So,

fact of this case was that the a ‘N’ company contracted with ‘A’, the nominee of the syndicate

company which was not even incorporated, to grant a lease of certain coal mining rights for three

years. After the syndicate was registered, it claimed the contracted lease which the company ‘N’

refused.

Book Review:

Company law, DR Avtar singh: Eastern book company Lucknow

Company law by Dr avtar singh is highly acclaimed and sought after book in the field of

company law. The company act, 1956 has been partially repealed and replaced by companies act,

2013. In this edition the author has explained the new act with great prec ision and clarity.

DESCRIPTIONS OF THE RESE RCH SOUrces

1. Dr.Avtar singh, Company law, Eastern book company lucknow

2. Dr.R.K BANGIA,Company law,Allahbad Law Agency Law publishers.





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