Who is a Company’s Promoter?
A company’s promoter is the person who initiates the company’s incorporation and intends to use the company as a vehicle to carry on business. A promoter takes an active part in the decision to incorporate and in incorporating the company.
An agent who carries out the process of incorporating is not a promoter.
A promoter can be an individual or another company.
Why is determining the Company’s Promoter important?
Determining the promoter is important because a promoter owes certain duties to the company. A promoter can be sued by the company or where the company is wound up, by the liquidator.
Companies Act 2016 also regulates the liability of a promoter in relation to unlisted recreational clubs that issue prospectus.
More extensive statutory provisions are provided under Capital Markets & Services Act 2007 (“CMSA”) specifying the liability of a promoter in relation to the issuance of shares by a public company. These provisions are applicable in the context of issuance of a prospectus required to be registered with the Securities Commission when a public company issue shares or securities.
Duty of Company’s Promoter
* Avoid secret profit
* Other conducts which may trigger breach such as non-disclosure of his identity as the owner of any asset acquired or from the company even if he did not make any monetary gain.
Full and frank disclosure by the Promoter
Promoter must disclose all relevant information for company to make informed decision.
In Whaley Bridge Calico Printing Co v Green and Smith, Green acquired a painting for GBP15,000 which Green later sold to Smith for GBP20,000. Green and Smith then incorporated the Company and Smith sold off the painting to the Company for GBP20,000 and promised to give GBP3,000 to Green (but has not paid). The Company upon discovering the deal, sought to recover the sum and the Court held that the Company can recover the amount promised to Green.
More sharing on company matters can be seen here.
How can Bizboard help?
Bizboard has a team of qualified and licensed company secretaries as required in the Companies Act 2016 and the Companies Commission of Malaysia.
Our highly qualified team has worked throughout various industries and has extensive knowledge to assist the company in secretarial matters.
For more information contact us.
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