Question

A promoter of company can be described as -
(A) An agent
(B) A trustee
select the correct answer from the options given below -

• A. Both A and B
• B. A only
• C. B only
• D. Neither A nor B

Answer 1

The correct option is D Neither A nor B

A promoter is a person who does all necessary preliminary work, incidental to the formation or promotion of the company. To be a promoter one need not necessarily be associated with the initial formation of the company; one who subsequently helps to arrange floating of its capital will equally be regarded as a promoter. A promoter is neither a trustee nor an agent of the company which he promotes because there is no trust or principal in existence at the time of his efforts. But certain fiduciary duties have been imposed on him under the Companies Act.