12 Questions
What is the primary role of a promoter in the formation of a company?
To take the necessary steps to form a company and set it going
What is the significance of the case Twycross v Grant (1877)?
It defined the role of a promoter in the formation of a company
What is the consequence of a promoter's breach of fiduciary duty?
The company may sue the promoter for damages and rescind the contract
What is the primary difference between a promoter's role and a company's management?
A promoter's role is temporary, while a company's management is permanent
What is the basis of a promoter's fiduciary duty to the company?
The company's reliance on the promoter for its formation
What is the significance of the phrase 'fiduciary duty' in the context of a promoter's role?
It implies a trust-based relationship between the promoter and the company
What is the relationship between a promoter and a company?
That of a trustee
Why can't a company enter into a contract of employment with a promoter?
Lack of contractual capacity
What can a company do to a promoter who has taken bribes or made a secret profit?
Call upon the promoter to disclose
What is the provision in the Companies Act regarding pre-contractual benefits?
Section 20 (2) of the Companies Act
What is the consequence of a company being non-existent at the time a contract is made on its behalf?
The promoters and not the company are liable for the contract
What is the consequence of a company ratifying a pre-incorporation contract?
The promoters become liable for the contract
Test your knowledge about the role of a promoter in forming a company. Learn about the definition of a promoter and their responsibilities in setting up a company. Brush up on your business law concepts and understand who a promoter is in the context of company formation.
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