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Question
Why are promoters neither the agents nor the trustees of a company?
Why are promoters neither the agents nor the trustees of a company?
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Solution
The promoters are neither the agents nor the trustees of a company :
(a) They can't be the agents as the company is yet to be incorporated, so it can't appoint him as an agent.
(b) They can't be the trustee 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 fudiciary position and are personally liable for all the contracts entered by them for the company before its incorporation.
The promoters are neither the agents nor the trustees of a company :
(a) They can't be the agents as the company is yet to be incorporated, so it can't appoint him as an agent.
(b) They can't be the trustee 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 fudiciary position and are personally liable for all the contracts entered by them for the company before its incorporation.
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