1. To what extend promoter can be responsible for pre-incorporation contracts made on behalf of the company which is at promotion stage. How can the losses be compensated.

2. Overview Promoters Functions of Promoter Formation of the Company
Duties of Promoter
Rights of Promoter
Pre-incorporation Contracts
Liabilities of Promoter
Promoters Liability on Pre-incorporated Contracts
Conclusion

3. Promoters Promoter is a person:
(a)who has been named as such in a prospectus or is identified by the
company in the annual return referred to in section 92; or
(b) who has control over the affairs of the company, directly or indirectly
whether as a shareholder, director or otherwise; or
(c) in accordance with whose advice, directions or instructions the board of Directors of the company is accustomed to act.
LEGAL POSITION OF PROMOTER
Neither a trustee nor an agent

4. Functions of Promoter Discovery of business idea
Detailed investigation
Assembling the factor of production
Entering into preliminary contracts
Financial needs of the company
Name and type of business
Location of business
Prepare incorporation documents
Subscription money

5. Formation of Company
Memorandum of Association and Articles of Association
Preliminary Contracts
Formation of prospectus
Registration of Company
Preliminary expenses
Subscription

6. Duties of Promoter Duty to Disclose Dedication of corporate funds
Good Faith
Not to make secret profits
Duty to give benefits of Negotiation of company
Not to make unfair use of his position
Duty of promoter against the future allottees

7. Rights of Promoter Right of indemnity
One promoter can claim against another promoter for compensation
Right to receive the legitimate preliminary expenses
Entitled to receive the legitimate preliminary expenses
Right to receive the remuneration
No right against the company for remuneration unless there is a contract to effect.

8. Pre-incorporation Contracts
Made on behalf of company by promoter
Company had not yet been incorporated at the time of contract
Promoter is personally liable for these contracts
Different in nature
Authority of a promoter for pre-incorporated contracts

9. Liabilities of a Promoter
Information furnished during incorporation
Misinformation while promoting and advertising
Misleading promises to attract investments
Contravention of private placement
Deposit of money
Company liquidation and winding up activities
Secret profits
Responsible for preliminary contracts

10. Promoters liability on Pre-incorporation Contracts
Promoter is personally liable for breach of contract
If company found that promoter has made secret profit than:
Company can rescind the contract.
Where rescission is not possible, it can recover damages from the promoter.
Company can recover the secrets profits from the promoter.
Conclusion

11. Any Questions?

12. Thankyou.