Promoters

Abstract

One of the problems caused by the separate legal identity of the company is that prior to registration it has no existence at all. The persons who are responsible for the company coming into existence are known as ‘promoters’. The law imposes duties on them not unlike those owed by directors. This is because the company can be badly cheated at the outset, particularly by those who sell it the assets on which it will found its business. The importance of the law on promoters has been much diminished by the controls exercised over public companies by the various regulatory authorities such as the stock exchange. It is now very rare for a new company to seek money from the public. However the rules remain valid.