Promoting the company is not only the first, but also the most important step that defines the success and failure of the company in the future. Some necessary tasks that the organizers perform during the promotion are as follows: If more than one promoter cooperates, one may claim from the other compensation or damages paid by him in the performance of his duties. The organizers are jointly and severally liable for false or misleading statements and breach of other obligations. If the organiser of the undertaking does not fulfil its obligations, the Companies Act provides for remedies for companies against project promoters. These remedies are: The idea of running a business that can be profitably operated is conceived either by one person or by a group of people called promoters. Once the idea is conceived, project proponents conduct detailed research to identify the weaknesses and strengths of the idea, determine the amount of capital required, and estimate operating costs and expected revenues. As in section 63 of the Act, a promoter who makes misleading statements in a prospectus may incur up to 2 years` imprisonment (in case of serious fraud and subsequent violations) or be fined Rs 5000 for misrepresentation in the prospectus. In this case, a group of people bought “Olympia” (an amphitheatre) and sold it to a company they promoted, making a hidden profit of £20,000 which was not stated in the prospectus. It was claimed that a profit of £20,000 was a hidden profit and that the project promoters were obliged to pay it to the company because disclosure was insufficient. [4] Epgp.inflibnet.ac.in. 2021.
Project proponents, their positions, powers, duties and responsibilities. [online] Available from: [Accessed 17 July 2021]. A promoter is not entitled to remuneration from the company unless there is a contract to that effect. In some cases, the corporation`s articles provide that directors pay a certain amount to promoters for their services, but this does not give promoters a contractual right to sue the corporation. It is simply a power delegated to the directors of the corporation. It is important to identify project promoters, as the Companies Act provides several obligations, powers and responsibilities for project promoters. Although there are two statutes defining the word Promotors – Companies Act, 2013 and Real Estate (Regulation and Development) Act, 2016 (RERA), only the RERA defines the duties and responsibilities of project proponents under the Act. Let us distinguish between the two. However, the promoters are usually the directors, so in practice the promoters receive their remuneration.
Deputy Director: These are directors appointed by the Board of Directors to replace the original directors for at least 3 months in the event of absence or incapacity. Typically, they are appointed for non-resident Indian directors or foreign directors of a company. Proponents create an appropriate and well-planned corporate governance structure and other related functions that the company would need in the beginning. Typically, an expert is hired to estimate the costs that would be required. A director is not a servant, but a controller of the affairs of a corporation (as in Moriarty v. Regent`s Garage Co.) 1. Design a business idea and explore its possibilities. These are people who occasionally promote a business, but are not very active every day. They run two to three companies at the same time and deal only with critical business issues.
The two important results emerge from the fiduciary position of the promoters: 149 (1) – “Each company should have a board of directors composed of natural persons as directors” – For public limited companies – min. 3 directors and for private companies – min. 2 directors and in the case of a sole proprietorship – 1 director according to Justice C. Cockburn. “The promoter is someone who undertakes to form and initiate a company in relation to a particular object and who takes the necessary steps to achieve this objective.” In the context of the liquidation of the company, the court may, at the request of the official receiver, hold a project promoter liable for a fault or breach of trust. (§ 543). 2. The developer does not make a profit on the sale of its own land to the corporation unless all material facts are disclosed.
If he enters into a contract for the sale of his own property to the Company without making full disclosure, the Company may either refuse/revoke the sale or confirm the contract and recover the profit made by the developer from the latter. Directors and promoters have different responsibilities. The company is not responsible for the pre-incorporation agreement because the company did not legally exist at the time of entering into the contract. Therefore, third parties cannot sue the company on the basis of the pre-incorporation agreement. However, if the company ratifies the contract with the acceptance of the third party or if the company renews the contract, only the company can be held liable. If more than one person acts as a promoter of the Corporation, a promoter may claim from another promoter the compensation paid by him and the damages paid by him. The organisers are jointly and severally liable for false information contained in the prospectus and for secret prices.
