FOR INDIA'S BEST CA CS CMA VIDEO CLASSES CALL 9980100288 OR VISIT HERE
Take This Quiz & Predict Your Score in the coming CA CS or CMA Exam!
  • How important it is for you to pass the exam in this attempt?
  • What percentage of course you have finished well so far roughly?
  • How many hours you study in a day?
  • How many times you have revised the topics you have finished
  • Have you taken online or pen drive or live class from a renowned faculty?
  • What percentage of the classes you have watched?
  • Have you attempted mock tests or practice tests yet?
  • Are you planning to attempt mock tests conducted by external bodies- ICAI, ICSI, ICMAI or other institute?
  • How many tests you have taken?
  • Did you manage to finish the test papers on time?
  • Are you strictly following study material provided by the exam conducting authority such as ICAI/ICSI/ICMAI/Other Body?
  • How is your health in general?
  • How is your food habit?
  • Any interest in yoga or exercise or play sports regularly?
  • Planning to sleep well nights before the exams?
  • Planning to have light food and water before exams?

Promoters of the company

Promoters of the company

Persons who initiate promotion of a company are known as promoters. All persons who take
steps for the registration of a company e.g., those associated with the preparation of a prospectus
or in drawing up the Memorandum of Association of the company and assisting in its
registration are regarded as promoters. It should, however, be noted that persons acting only
in a professional capacity e.g., the solicitor, banker, accountant etc. are not regarded as
promoters.
The Companies Act, 2013 defines the term “Promoter” under section 2(69) which means a
person—
(a) who has been named as such in a prospectus or is identified by the company in the
annual return referred to in section 92; or
(b) who has control over the affairs of the company, directly or indirectly whether as a
shareholder, director or otherwise; or
(c) in accordance with whose advice, directions or instructions the Board of Directors of
the company is accustomed to act.
However, a person who is acting merely in a professional, shall not be regarded as promoter,
e.g., the solicitor, banker, accountant etc. are not regarded as promoters.
Any one who assists in the formation for a consideration payable if the company is floated, is a
promoter. “They are those who set in motion the machinery by which the Act enables them to
create an incorporated company”, [per Lord Blank burn in Erlanger vs. Sambrero Phosphate
& Co. (1893) 3 App. Case. 1218].

(a) Promoter’s duty to disclose: Until a company is incorporated, a promoter stands in a
fiduciary capacity towards the company and its prospective shareholders. Hence, he must not
make, either directly or indirectly or through a nominee etc., any profit out of his trust, unless
the company after full disclosure of the facts, consents. In addition to his duty for declaration
of secret profits, he must disclose to the company any interest he has in a transaction entered
in to by it. Such disclosure is ineffective if made merely to directors who are nominees of the
promoters. Disclosure may be made either to an independent board, or by means of a
prospectus to the prospective shareholders. If the promoter makes a secret profit the company
can rescind the contract or compel him to account for it. Where all the members of a private
company are cognisant of the facts, the rule would not apply.
(b) Promoters as vendors: A promoter is entitled to sell his own property to the company
provided he makes proper disclosure. This also applies to property which he acquires during
the promotion and which he resells to the company. If he fails to make disclosure the company
may either (a) rescind the contract, or (b) compel the promoter to surrender the profit.
(c) Promoter’s remuneration: A promoter has no right to demand any remuneration from
the company, for his promotional services in the absence of an express contract with the
company. Indeed, in the absence of such a contract, he cannot even recover from the
company payments he has made towards legal fees, stamp duties, registration fees, or other
expenses in connection with the formation of the company.

cakart

For popular videos of CA CS CMA visit www.cakart.in

Click here to download FREE CA CS CMA books.

Leave a comment

Your email address will not be published. Required fields are marked *