Briefly explain the position of a promoter of a company.

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Solution

The promoters are neither the agents nor the trustee of a company.

(a) They cannot be the agents as the company is yet to be incorporated so it cannot appoint him as an agent.

(b) They cannot be the trustees of the company as the wealth or property which they are investing to run the business are not owned in the company's name.

Therefore, promoters enjoy a fiduciary position and are personally liable for all the contracts entered by them for the company before its incorporation.

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