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Question
Who stands in a fiduciary relation to the company?
Who stands in a fiduciary relation to the company?
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Solution
The correct option is B Promoter
The promoter is neither a trustee nor an agent of the company because there is no company yet in existence. His legal position is that he stands in a fiduciary position towards the company about to be formed. This was further held in the case of Erlanger v. New Semberero Phosphate Co. by Lord Cairns that the promoters of a company stand undoubtedly in a fiduciary position. They have in their hands the creation and moulding of the company. They have the power of defining how and when and in what shape and under what supervision, it shall start into existence and begin to act as a trading corporation.
The promoter is neither a trustee nor an agent of the company because there is no company yet in existence. His legal position is that he stands in a fiduciary position towards the company about to be formed. This was further held in the case of Erlanger v. New Semberero Phosphate Co. by Lord Cairns that the promoters of a company stand undoubtedly in a fiduciary position. They have in their hands the creation and moulding of the company. They have the power of defining how and when and in what shape and under what supervision, it shall start into existence and begin to act as a trading corporation.
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