ABSTRACT
This chapter makes students aware of the role that promoters have played in company formation. A promoter will be a person responsible in whole or part for: the organizing prior to incorporation; the actual registration of the company; and the operation of the company immediately after incorporation has taken place. A promoter may agree to sell his own assets to the company in return for shares once it has been incorporated. A potential danger is that the assets may be overvalued. Remedies available to the company for a promoter’s breach of fiduciary duty include rescission; recovery of the undisclosed profit; retention of the property; and damages. A promoter may be advised to include in pre-incorporation contracts a term that he is to be released from liability when the company is incorporated and it enters into a contract with the third party on the same terms as with the promoter.
