PROMOTER WHO IS A PROMOTER The promoter is

PROMOTER

WHO IS A PROMOTER ? ? ? The promoter is the one: (i) Who has been named in the prospectus or is identified in the annual returns of the company. (ii) Who has control over the affairs of the company directly or indirectly (iii) In accordance with whose advice, directions or instructions the Board functions (iv) PERSON WHO CONCEIVE THE IDEA OF THE COMPANY & TRANSLATE IT INTO A WORKING REALITY. (iii) PROMOTER IS A PERSON WHO ASSEMBLES MEN, MONEY & MATERIAL INTO A GOING CONCERN.

Promoter: Functions • Planning the formation • Considering prestart problems • Selecting first directors & fulfilling obligations complying them. http: //timesofindiatimes. com/business/indiabusiness/Nita-Ambani-becomes-first-woman-director-in. Reliance/articleshow/36770637. cms • 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 a promoter (i) Quasi Trustee (ii) Fiduciary relationship (based upon trust & confidence) The relation is summed up as : (i) Not to make any secret profit (ii) Not to make any profit at the expense of the company (iii) To make full disclosure of interest (iv) To give benefit of negotiations to the company (v) Not to make unfair use of position

Remuneration to promoters i. Cash ii. Option to purchase shares iii. Partly in cash, partly in shares & debentures iv. Commission

Pre-incorporation / Preliminary Contracts entered into by the promoter before the incorporation to acquire some property or right for the company. Position of promoters in regard to preliminary contracts: 1. Company not bound by pre incorporation contracts e. g solicitor fees 2. Company cannot enforce pre incorporation contract e. g contract between company N before registration with a syndicate for mining lease 3. Promoters personally liable e. g. purchase of stock before formation and debt is due 4. Ratification of a pre-incorporation contract 5. Specific performance of pre-incorporation contract.

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