An individual, a firm, an association of person or a company

An individual, a firm, an association of person or a company may fun chon as a promoter. Whether a person is a promoter or not very much depends on
the facts in each particular case. Only one who has a desire to form a company and is prepared to take necessary steps to bring a company into
existence is a promoter.Legal Position of a Promoter, The legal position of a promoter is somewhat peculiar. He is not a taste for the coin any because

there is no company yet in existence. For the same reason, he cannot be the company's agent either.
As per the spirit of the provisions of the Companies Act with regard to promoters and some judicial opinions, it may be clearly inferred that a promoter
stands in a fiduciary position or relationship to the company. Fiduciary position means that he holds a position of good faith (complete confidence) and
trust. In this position, he is required to act in the following manner:
t. Transfer of Benefits. A promoter, if he has secured any benefits from the negotiationscontracts entered into by him for the company" must pass on all
such benefits to the company.
2. Not to make any Profit at the Expense of the Company. A promoter must not If ake any profit directly or indirectly at the expense of or by using the
name of the company. If any secret profit is made in violation of this mle, the company may, on discovering it, compel him to account for and surrender
such profit.
3. Not to make Unfair use of Position. A promoter must not make an unfair or unreasonable use of his position and must take care to avoid anything which
has the appearance of undue influence or fraud.
4. Full Disclosure to the Company. A promoter must make full disclosures of material facts and of his personal interest or profits to the company regarding

the transactions, conducted with it. He can sell his own business to the company at a profit. It is not forbidden by law. However, he has to make a full
disclosure in this connection to an independent .Board of Directors or to the shareholders as a body by means of a prospectus.