Question

For several reasons, it is important to determine whether or not a person is a promoter. Which one of the following reasons is not valid?

• A. Promoters owe fiduciary duties to the unformed company.
• B. Promoters are subject to certain provisions contained in the Companies Act.
• C. Promoters may be liable for acts entered into on behalf of the unformed company.
• D. Promoters who sign their name on behalf of an unformed company can face criminal liability if the company is not subsequently fully incorporated.

Answer 1

The correct option is D Promoters who sign their name on behalf of an unformed company can face criminal liability if the company is not subsequently fully incorporated.

Promoter means 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

(d) Promoters owe fiduciary duties to the unformed company.

(e) Promoters may be liable for acts entered into on behalf of the unformed company.