We will be discussing promoters in detail and pre incorporation contracts along with its enforceability in light of important case laws and Pakistani legislations.
Table of Contents
- PROMOTERS
- PRE-INCORPORATION CONTRACTS
Objectives and Key Themes
This text aims to explore the role and legal implications of promoters within company formation. It delves into the nature of pre-incorporation contracts, examining their enforceability and the associated liabilities of promoters.
- The Definition and Fiduciary Duties of Promoters
- The Legal Status of Pre-Incorporation Contracts
- The Liability of Promoters in Pre-Incorporation Contracts
- The Ratification of Pre-Incorporation Contracts by the Company
- The Legal Framework and Key Case Laws in Pakistan
Chapter Summaries
- PROMOTERS: This chapter provides a comprehensive definition of a promoter and their role in company formation. It examines the historical development of the term and analyzes the key fiduciary duties owed by promoters to investors and the company.
- PRE-INCORPORATION CONTRACTS: This chapter explores the legal status and enforceability of contracts entered into by promoters on behalf of a company before its official incorporation. It examines the challenges associated with such contracts due to the company's non-existent legal status. The chapter also investigates the potential liability of promoters for breaches or fraud in these agreements.
Keywords
This text focuses on key concepts such as promoters, pre-incorporation contracts, company formation, fiduciary duties, legal liability, enforceability, and relevant case law in Pakistan.
Frequently Asked Questions
Who is a promoter in company formation?
A promoter is an individual or entity who undertakes the necessary steps to set up a company, including planning, fundraising, and legal incorporation.
What are pre-incorporation contracts?
These are contracts entered into by promoters on behalf of a company before it has been officially registered and granted legal status.
Are pre-incorporation contracts legally enforceable?
Enforceability is complex because a non-existent company cannot be a party to a contract. Often, promoters remain personally liable unless the company ratifies the contract after formation.
What are the fiduciary duties of a promoter?
Promoters owe duties of good faith and loyalty, meaning they must disclose any secret profits and act in the best interests of future investors and the company.
Can a company ratify a contract made before its birth?
Under many jurisdictions, including light of Pakistani legislation, a company can adopt or ratify such contracts once it achieves legal personality.
What happens if a promoter commits fraud during incorporation?
The promoter can be held personally liable for damages to the company or the investors involved, based on their fiduciary responsibility.
- Quote paper
- Ayesha Masood (Author), 2019, The Significance of Promoters and Enforcability of Pre-Incorporation Contracts, Munich, GRIN Verlag, https://www.grin.com/document/1353837
