Question

Promoter is both an agent and trustee of the proposed company.

• A. True
• B. False
• C. Partly True
• D. Partly False

Answer 1

The correct option is B False

False

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, like an agent, have been imposed on him under the Companies Act. As such he is said to be in & fiduciary position (a position full of trust and confidence) towards the company and the original allottee of shares. Consequently, a promoter must make full disclosure of the relevant facts, including any profit made.