PROMOTER OF COMPANY UNDER COMPANIES ACT 2013

 BY SUSHMA GOWDA

INTRODUCTION

Promotion means steps required business to bring into existence as a company which is mainly taken by promoter.

Promoter means who named in prospectus or is identified by the company in Annual return, promoter is the one who has control in the affairs of the company as a shareholders, director or in any other form.

Promoters in whose direction board of director is accustomed to act. Promoter shall not hold professional activity.

RIGHTS OF PROMOTERS

Promoters stands in a fiduciary capacity , however it is stated in Nitrate Co. v. Lagunas Syndicate,(1899) 2 ch. 392 .

It doesn’t act as agent nor trustee of the company because company yet come into existence.

Promoter of the Company does not have any legal to obtain the promotional expenses for his service unless it is validly written in the contract during the incorporation of such company.

1) Right to receive preliminary expenses only if contract is created and it is mention in the Articles.

2) Right to recover amount from co-promoter.

Any work should be Ultra vires the Articles of Association and Memorandum of Association or any of the forms contracts etc.

FUNCTIONS OF PROMOTER

A promoter usually brings idea to start a business generate idea to bring company existence. Promoter also determine whether the business will profitable one or not.

Promoters also take decision regarding the following matters.

1) Whether to start new business or take over the existing one

2) Promoters decide whether company should be Public, Private, Limited or Unlimited Company, whether liability of the member should be limited one or unlimited one.

3) Amount to be put as authorized capital or arranging the subscribers to Memorandum including issue of shares.

4) while preparation Memorandum, Articles and other documents Promoters required

5) promoters negotiate with person who become the first director of the company

6) Promoter enters into Pre-incorporation Contracts including filing the required documents with registrar of Company from time to time basis.

REMUNERATION PAYMENT TO PROMOTER

Remuneration can be paid in any form to the promoter, this all are the ways to pay the Promoter.

1) Issue of shares at par.

2) payment of commission to be paid to promoters on shares sold by promoter.

3) Paying Lumpsum Amount as Remuneration

LIABILITIES OF PROMOTERS

Promoters will be punishable if they contravene any of the law Some of the Contravention such as:

1) Incorporation of Company by giving the false Statement

2) Civil and Criminal Liability in Misstatement in prospectus

3) Fraudulently inducing persons to invest money on company the promoter should pay liability on such cases.

4) Failure to co-operate with company liquidator during winding up.

CONCLUSIVE EVIDENCE

Certificate of Incorporation will be Considered as Conclusive Evidence stating that promoter had complied with all laws, rules and regulation made thereunder. And date borne in certificate of incorporation will be considered as certificate of incorporation.

Such certificate of Incorporation will be provided by the Registrar of company under Companies act 2013,