Types of Promoters Quiz chapter 6
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Questions and Answers

What is the main responsibility of a professional promoter?

  • To promote the company once in a while
  • To promote the company financially
  • To form the idea and bring the company into existence
  • To specialize in promoting the company (correct)

    • What distinguishes an occasional promoter from other types of promoters?

  • Forms the idea and brings the company into existence
  • Promotes the company once in a while but not on a regular basis (correct)
  • Specializes in promoting the company
  • Promotes the company financially

    • What is the primary role of a financial promoter?

  • To specialize in promoting the company
  • To form the idea and bring the company into existence
  • To promote the company financially like a commercial bank (correct)
  • To promote the company once in a while

    • What is one of the functions of a promoter according to the text?

    <p>To discover an idea for forming a company</p> Signup and view all the answers

    According to the text, what is one duty of a promoter?

    <p>To choose bank and legal advisors</p> Signup and view all the answers

    Which type of promoter forms the idea and brings the company into existence?

    <p>Entrepreneurial promoter</p> Signup and view all the answers

    What does an occasional promoter do?

    <p>Promotes the company once in a while but not on a regular basis</p> Signup and view all the answers

    What is the purpose of the doctrine of constructive notice?

    <p>To secure the company from outsiders tricking the company by alleging they were not aware of the content of the MOA and AOA</p> Signup and view all the answers

    Which is an exception to the doctrine of indoor management?

    <p>Acts within apparent authority</p> Signup and view all the answers

    What is contained in the Memorandum of Association (MOA)?

    <p>Objectives and powers of the company</p> Signup and view all the answers

    What governs the internal management of the company?

    <p>Articles of Association (AOA)</p> Signup and view all the answers

    What does Doctrine of indoor management provide protection for?

    Signup and view all the answers

    What does Doctrine of constructive notice expect a person to do before any transaction with the company?

    <p>To inspect basic public documents such as MOA and AOA</p> Signup and view all the answers

    What is an effect of an ultra-vires transaction?

    <p>Directors may be held personally liable for ultra vires acts.</p> Signup and view all the answers

    What is contained in Articles of Association (AOA)?

    <p>Internal regulations of the company.</p> Signup and view all the answers

    What does Memorandum of Association (MOA) govern?

    <p>Relationship of the company with outsiders.</p> Signup and view all the answers

    What is a purpose for which Doctrine of constructive notice is not workable?

    <p>To secure the company from outsiders tricking by alleging lack of awareness about MOA and AOA content</p> Signup and view all the answers

    What is the consequence if a promoter fails to disclose all material facts and any profit made when selling property to a company they are promoting?

    <p>The company may either reject the sale or approve it and recover the profit made</p> Signup and view all the answers

    What documents are required for company incorporation?

    <p>Memorandum of Association (MOA), Articles of Association (AOA), list of directors, consent letters, capital, and a statutory declaration</p> Signup and view all the answers

    What does the Memorandum of Association (MOA) include?

    <p>Limits of the company such as its name, registered office, objective, liability, capital, and association</p> Signup and view all the answers

    What is required if a change in the company's name is desired?

    <p>Approval by the government</p> Signup and view all the answers

    How can shareholders alter the capital clause of the MOA?

    <p>By passing an ordinary resolution and issuing new shares, dividing existing shares, or cancelling unissued shares</p> Signup and view all the answers

    What does the Doctrine of Ultra-vires refer to?

    <p>Acts beyond the powers of the directors or the MOA or AOA</p> Signup and view all the answers

    What happens if the company's objectives as stated in the MOA are different from the work agreed to in a contract?

    <p>The application of ultra-vires may be invoked</p> Signup and view all the answers

    How are promoters allowed to be paid?

    <p>In various ways including a lump sum, shares, or option to buy shares</p> Signup and view all the answers

    What happens if any profit made by a promoter when selling property is not disclosed?

    <p>The company may either reject the sale or approve it and recover the profit made</p> Signup and view all the answers

    Explain the role of a professional promoter.

    <p>A professional promoter is specialized in the job of promoting the company, and their main role is to promote the company and its projects on a regular basis.</p> Signup and view all the answers

    What are the functions of a promoter in forming a company?

    <p>The functions of a promoter in forming a company include discovering an idea for forming the company, investigating whether the idea is possible and profitable, choosing suitable people as first directors, choosing a name for the company, and choosing bank and legal advisors.</p> Signup and view all the answers

    List the four duties of a promoter.

    <p>The four duties of a promoter are to act in the best interests of the company, to disclose any personal interest in any transaction or property of the company, to not make any secret profit, and to act with utmost good faith towards the company.</p> Signup and view all the answers

    What are the consequences of an ultra-vires transaction?

    <p>The consequences of an ultra-vires transaction are: a) The company cannot sue any person to enforce any of its rights. b) No person can sue the company for enforcement of its rights. c) The directors may be held personally liable to outsiders for ultra vires acts.</p> Signup and view all the answers

    What is the purpose of the doctrine of constructive notice?

    <p>The purpose of the constructive notice doctrine is to secure the company from outsiders who want to trick the company by alleging they were not aware of the content of the Memorandum of Association (MOA) and Articles of Association (AOA), and to escape from their contractual liabilities.</p> Signup and view all the answers

    What does the Doctrine of indoor management provide protection for?

    <p>The Doctrine of indoor management provides protection to outsiders who deal with the company by giving them the confidence in dealing with the company with limited liability.</p> Signup and view all the answers

    What are the exceptions to the doctrine of indoor management?

    <p>The exceptions to the doctrine of indoor management are: 1) Knowledge of irregularity. 2) Sufficient ground for suspicion. 3) Forgery. 4) Acts outside apparent authority. 5) Non-existence of agency. 6) Acts ultra vires the company.</p> Signup and view all the answers

    What is the difference between Memorandum of Association (MOA) and Articles of Association (AOA)?

    <p>The Memorandum of Association (MOA) contains the terms the company must meet to be registered and governs the relationship of the company with outsiders. The Articles of Association (AOA) contains the objectives and powers of the company, provides rules on how those objectives and powers would be effective, and governs the internal management of the company.</p> Signup and view all the answers

    What are the main documents required for company incorporation?

    <p>The main documents required for company incorporation include the Memorandum of Association (MOA), Articles of Association (AOA), list of directors, consent letters, capital, and a statutory declaration</p> Signup and view all the answers

    What are the key elements included in the Memorandum of Association (MOA) of a company?

    <p>The Memorandum of Association (MOA) includes the name of the company, registered office, objective, liability, capital, and association</p> Signup and view all the answers

    What are the requirements for the name of a company as per the text?

    <p>The name of the company must not be identical to an existing company, must end with 'limited' or 'private limited,' and be approved by the government if changed</p> Signup and view all the answers

    How can the objective clause of the MOA be altered?

    <p>The objective clause of the MOA may be altered by passing a special resolution and filing it with the registrar within a month</p> Signup and view all the answers

    In what ways can shareholders alter the capital clause of the MOA?

    <p>Shareholders can alter the capital clause of the MOA by passing an ordinary resolution and issuing new shares, dividing existing shares, or cancelling unissued shares</p> Signup and view all the answers

    What does the Doctrine of Ultra-vires refer to?

    <p>The Doctrine of Ultra-vires refers to acts beyond the powers of the directors or the MOA or AOA</p> Signup and view all the answers

    Under what circumstances can the application of the doctrine of ultra-vires be invoked?

    <p>If the company's objectives as stated in the MOA are different from the work agreed to in the contract, the application of the doctrine of ultra-vires may be invoked</p> Signup and view all the answers

    What are the requirements for the company's registered office as per the text?

    <p>The company's registered office must be stated, and any change requires a specific type of resolution depending on the location of the change</p> Signup and view all the answers

    What are the consequences of a promoter failing to disclose all material facts and any profit made when selling property to a company they are promoting?

    <p>If the promoter fails to disclose, the company may either reject the sale or approve it and recover the profit made</p> Signup and view all the answers

    What does the Doctrine of Ultra-vires protect against?

    <p>The Doctrine of Ultra-vires protects against acts beyond the powers of the directors or the MOA or AOA</p> Signup and view all the answers

    An ______ promoter promotes the company once in a while but not on a regular basis

    <p>occasional</p> Signup and view all the answers

    Professional promoter specializes in the job of promoting the company

    <p>professional</p> Signup and view all the answers

    Financial promoter promotes the company ______ly like a commercial bank

    <p>financial</p> Signup and view all the answers

    Entrepreneurial promoter forms the idea and takes the necessary steps to bring a company into existence and actually brings it into existence

    <p>entrepreneurial</p> Signup and view all the answers

    To ______ an idea for forming a company

    <p>discover</p> Signup and view all the answers

    In ______ whether the idea is possible and profitable

    <p>investigate</p> Signup and view all the answers

    To ______ suitable people as first directors

    <p>choose</p> Signup and view all the answers

    To choose a ______ for the company

    <p>name</p> Signup and view all the answers

    To choose bank and legal ______

    <p>advisors</p> Signup and view all the answers

    To ______ an idea for forming a company

    <p>discover</p> Signup and view all the answers

    Any change in the company's registered office requires a specific type of resolution depending on the ______ of the change

    <p>location</p> Signup and view all the answers

    The objective clause of the MOA may be altered by passing a ______ resolution and filing it with the registrar within a month

    <p>special</p> Signup and view all the answers

    Shareholders can alter the capital clause of the MOA by passing an ______ resolution and issuing new shares, dividing existing shares, or cancelling unissued shares

    <p>ordinary</p> Signup and view all the answers

    The name of the company must not be identical to an existing company, must end with 'limited' or 'private limited,' and be approved by the ______ if changed

    <p>government</p> Signup and view all the answers

    The MOA is the charter of the company and sets out its limits, including its name, registered office, objective, liability, capital, and ______

    <p>association</p> Signup and view all the answers

    Any pre-corporation contracts are void unless authorized by the company's terms of incorporation and communicated ______

    <p>acceptance</p> Signup and view all the answers

    A promoter may be paid in various ways, including a lump sum, shares, or the option to buy ______

    <p>shares</p> Signup and view all the answers

    The company's registered office must be stated, and any change requires a specific type of resolution depending on the ______ of the change

    <p>location</p> Signup and view all the answers

    The ______ of Ultra-vires refers to acts beyond the powers of the directors or the MOA or AOA

    <p>Doctrine</p> Signup and view all the answers

    The MOA is the charter of the company and sets out its limits, including its name, registered office, objective, liability, capital, and ______

    <p>association</p> Signup and view all the answers

    Doctrine of ultra-vires refers to the company exceeding its _____________

    <p>legal powers</p> Signup and view all the answers

    An effect of an ultra-vires transaction is that the company may not be sued for _____________

    <p>breach</p> Signup and view all the answers

    The Memorandum of Association (MOA) governs the relationship of the company with _____________

    <p>outsiders</p> Signup and view all the answers

    The Articles of Association (AOA) contains the objectives and powers of the company and provides rules on how those objectives and powers would be _____________

    <p>effective</p> Signup and view all the answers

    The Memorandum of Association (MOA) cannot be easily changed or altered, while the Articles of Association (AOA) can be easily changed or _____________

    <p>altered</p> Signup and view all the answers

    The doctrine of constructive notice expects a person to inspect the basic public documents of the company, such as the MOA and AOA, before any _____________

    <p>transaction</p> Signup and view all the answers

    Doctrine of indoor management provides protection to outsiders who deal with the company with _____________ liability

    <p>limited</p> Signup and view all the answers

    The Memorandum of Association (MOA) governs the relationship of the company with _____________

    <p>outsiders</p> Signup and view all the answers

    One of the functions of a promoter is to bring the company into _____________

    <p>existence</p> Signup and view all the answers

    The purpose of the doctrine of constructive notice is to secure the company from outsiders who want to trick the company by alleging they were not aware of the content of the MOA and AOA, and to escape from their _____________ liabilities

    <p>contractual</p> Signup and view all the answers

    Study Notes

    • A promoter must fully disclose all material facts and any profit they made when selling property to a company they are promoting

    • If the promoter fails to disclose, the company may either reject the sale or approve it and recover the profit made

    • A promoter holds a fiduciary position and is not allowed to make any direct or indirect profit at the expense of the company

    • Any pre-corporation contracts are void unless authorized by the company's terms of incorporation and communicated acceptance

    • A promoter may be paid in various ways, including a lump sum, shares, or the option to buy shares

    • Documents required for company incorporation include the Memorandum of Association (MOA), Articles of Association (AOA), list of directors, consent letters, capital, and a statutory declaration

    • The MOA is the charter of the company and sets out its limits, including its name, registered office, objective, liability, capital, and association

    • The name of the company must not be identical to an existing company, must end with "limited" or "private limited," and be approved by the government if changed

    • The company's registered office must be stated, and any change requires a specific type of resolution depending on the location of the change

    • The objective clause of the MOA may be altered by passing a special resolution and filing it with the registrar within a month

    • Shareholders can alter the capital clause of the MOA by passing an ordinary resolution and issuing new shares, dividing existing shares, or cancelling unissued shares

    • The Doctrine of Ultra-vires refers to acts beyond the powers of the directors or the MOA or AOA.

    • If the company's objectives as stated in the MOA are different from the work agreed to in the contract, the application of the doctrine of ultra-vires may be invoked.

    • A promoter must fully disclose all material facts and any profit they made when selling property to a company they are promoting

    • If the promoter fails to disclose, the company may either reject the sale or approve it and recover the profit made

    • A promoter holds a fiduciary position and is not allowed to make any direct or indirect profit at the expense of the company

    • Any pre-corporation contracts are void unless authorized by the company's terms of incorporation and communicated acceptance

    • A promoter may be paid in various ways, including a lump sum, shares, or the option to buy shares

    • Documents required for company incorporation include the Memorandum of Association (MOA), Articles of Association (AOA), list of directors, consent letters, capital, and a statutory declaration

    • The MOA is the charter of the company and sets out its limits, including its name, registered office, objective, liability, capital, and association

    • The name of the company must not be identical to an existing company, must end with "limited" or "private limited," and be approved by the government if changed

    • The company's registered office must be stated, and any change requires a specific type of resolution depending on the location of the change

    • The objective clause of the MOA may be altered by passing a special resolution and filing it with the registrar within a month

    • Shareholders can alter the capital clause of the MOA by passing an ordinary resolution and issuing new shares, dividing existing shares, or cancelling unissued shares

    • The Doctrine of Ultra-vires refers to acts beyond the powers of the directors or the MOA or AOA.

    • If the company's objectives as stated in the MOA are different from the work agreed to in the contract, the application of the doctrine of ultra-vires may be invoked.

    • A promoter must fully disclose all material facts and any profit they made when selling property to a company they are promoting

    • If the promoter fails to disclose, the company may either reject the sale or approve it and recover the profit made

    • A promoter holds a fiduciary position and is not allowed to make any direct or indirect profit at the expense of the company

    • Any pre-corporation contracts are void unless authorized by the company's terms of incorporation and communicated acceptance

    • A promoter may be paid in various ways, including a lump sum, shares, or the option to buy shares

    • Documents required for company incorporation include the Memorandum of Association (MOA), Articles of Association (AOA), list of directors, consent letters, capital, and a statutory declaration

    • The MOA is the charter of the company and sets out its limits, including its name, registered office, objective, liability, capital, and association

    • The name of the company must not be identical to an existing company, must end with "limited" or "private limited," and be approved by the government if changed

    • The company's registered office must be stated, and any change requires a specific type of resolution depending on the location of the change

    • The objective clause of the MOA may be altered by passing a special resolution and filing it with the registrar within a month

    • Shareholders can alter the capital clause of the MOA by passing an ordinary resolution and issuing new shares, dividing existing shares, or cancelling unissued shares

    • The Doctrine of Ultra-vires refers to acts beyond the powers of the directors or the MOA or AOA.

    • If the company's objectives as stated in the MOA are different from the work agreed to in the contract, the application of the doctrine of ultra-vires may be invoked.

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