Promoters are those people who originate the idea of business and turn it into a company in reality. A promoter is described as the creator of wealth in a business. Merely signed the Memorandum of Association does not make one a promoter of the company. The promoters render important services in the formation of the company. A promoter may be an individual, a group of people forming an association, or a company. 

The promoters perform the following functions: 

1. To create an idea for forming a company and exploring all possibilities related to it
2. Collect the required number of people to run the business
3. Conduct the necessary negotiation for the business
4. Get the memorandum of Association and the Article of Association Drafted 
5. Arrange minimum subscription etc. 

The promoters are not the trustee or agent of the company because they come into play even before the company comes into existence. They help in setting up the company. Promoters hold a fiduciary relationship with the company and therefore a promoter is not allowed to make any secret profits, if found hold of any profits then he must refund it immediately to the company. Another obligation on the promoter is that he cannot derive profits from his own property which he has sold to the company for business purposes. He must make full disclosures to the company regarding the property. If in case the promoter fails to abide by the obligations out of his fiduciary duties towards the company, then the company may rescind the contract and sue the promoter for breach of his duties towards the company. 

The promoter of the company also has certain rights, such as: 

1. Right of indemnity
2. Right to receive remuneration 
3. Right to get the preliminary expenses 

With rights, the promoter also has certain duties: 

1. To disclose the secret profit 
2. To disclose all material information
3. To disclose all private arrangements 
4. He also holds a duty towards the future allottee. 

Promoters play a crucial role, both pre incorporate and post-incorporation of the company. They have the right to enter into preliminary agreements on behalf of the company which is yet to be established. They enter into the contract on behalf of the company, acting as the agents of the company. However, such contracts are not legally binding as the company does not yet exist. It has no legal existence until it is incorporated, and therefore, when it is registered, it is not legally binding on the company to follow the preliminary contracts. A company cannot enforce a preliminary contract. However, after the establishment of the company, the contract may be ratified by the board of directors of the company and after that, it becomes legally binding. 

The promoters play an essential role in establishing and incorporating a company and therefore hold a vital position. However, the company cannot be made liable for the acts of the promoters which he has done before the incorporation of the company and therefore the promoters are directly held liable in such cases. 

This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being.