TABLE OF CONTENTS There is no statutory definition of a promoter. However in simple terms a promoter is a person who decides to form a company and takes the steps to set it going.
A promoter stands in a fiduciary relationship with the company he is promoting. This means that he is in a position of trust and must act in good faith in the best interests of the company.
He has a general duty of care and skill.
He has a fiduciary duty not to make a secret profit.
Any profit made must be disclosed to and approved by:
an independent board of directors and/or
the members and
potential members via a prospectus.
Pre-incorporation contracts. A company cannot contract prior to incorporation as it does not exist and therefore has no contractual capacity. The contract is therefore between the promoter and the third party: Kelner ? Baxter 1866 (S36C CA85 reinforces the existing law).
Adoption of contracts by the company after incorporation, leaving contracts as nonbinding options in the meantime.
Assignment of contracts by promoters to the company after incorporation.
An agreement of novation after incorporation the company makes a new contract on the same terms as the old with the agreement of the other party.
Setting up an off-the-shelf (i.e. ready-made) company.
Cheap and simple.
Can trade immediately.
No pre-incorporation contracts.
Needs to deal with...
