Prospective shareholders must be informed of the promoter's interests before becoming members of the company.
Such failure renders the contract voidable, and the company may rescind the contract.
The term 'promoter' signifies one of business usage, summarizing various business operations familiar in the commercial world that lead to the creation of a company.
The articles bind the company and each member in the same manner and to the same extent as a contract, excluding all others.
Directors appointed by vendors are not considered an independent Board, affecting the effectiveness of disclosures.
It illustrated that articles constitute a contract not only between shareholders and the company but also among individual shareholders.
The principle that articles of association create a covenant between members, and a non-member cannot sue to enforce an agreement made by members.
A promoter engages in activities such as recruiting shareholders, appointing the first directors, acquiring business assets, and negotiating preliminary business contracts on behalf of the proposed company.
The court held that Mr. Lane's signature 'for and on behalf of' the company did not sufficiently exclude him from personal liability to repay the money, as there was no clear and express exclusion of liability.
No, a member cannot enforce rights conferred by the articles in any capacity other than as a member.
Such a contract has no legal effect and cannot be enforced by or against the company.
Section 44(1) states that promoters remain personally liable for pre-incorporation contracts, but not in the capacity of an 'agent'.
Members may sue the company and vice versa to enforce and restrain breaches of the regulations contained in the articles.
If disclosure is not made, the company may affirm the contract and sue the promoter for an account and payment of profits.
An independent Board is distinguished by its members being aware of the promoters' property, being competent judges, and capable of impartial judgment.
A promoter must disclose his interests and obtain approval from the initial members of the company.
In Kelner v Baxter, it was determined that promoters can be held personally liable for contracts made on behalf of a company that was not yet formed.
They may sue for remuneration under an express or implied contract of agency or for services containing an undertaking to pay.
Promoters can be personally liable for obligations undertaken in contracts made on behalf of a company that does not yet exist unless there is an express agreement stating otherwise.
Promoters are personally liable for all pre-incorporation contracts made for the benefit of their unformed company, regardless of their capacity or subjective beliefs.
No, a company cannot adopt or ratify a contract made before its incorporation as it was non-existent at that time.
Ratification occurs when a company signifies its intention to confirm or adopt a contract made on its behalf by its promoters before incorporation, but it cannot ratify pre-incorporation contracts.
It was held that an agent had no right to sue personally under a contract made in the name of an unincorporated company that was not in existence at the time of signing.
It states that the company's constitution binds the company and its members to the same extent as if they had covenanted to observe it.
The person cannot sue the company to recover expenses incurred before its incorporation, as the company has not yet been formed.
No, a company cannot ratify a pre-incorporation contract because it was made before the company came into existence, and any attempt to do so has no legal consequence regarding the promoter's personal liability.
Action to recover the amount must be instituted before the company's dissolution, as the promoter's liability terminates after dissolution.
The fiduciary duty of promoters involves acting loyally and in good faith towards the company, prioritizing its interests over their own.
The articles of association become a contract between the company and its members, characterized as a statutory contract with distinctive features.
A promoter is defined as a person engaged in the formation or floatation of a company, excluding those whose professional services are engaged in the process.
The principle established is that if a contract is signed by someone as an 'agent' without a principal existing at the time, the contract is inoperative unless binding on the signer.
Before incorporation, promoters are not deemed to be in partnership unless they jointly buy property with the intention of selling it at a profit to the company they form.
The principle that lack of independence of the Board is not sufficient grounds for rescinding a sale by such directors or their agents.
No, a promoter cannot sue the company for obligations undertaken before its incorporation as there is no principal in relation to whom they act as agent.
A member can petition the court for relief if the company's affairs are being conducted in a manner that is unfairly prejudicial to their interests.
A promoter must make full disclosure to the company of his personal interest in the transaction and all material facts before the completion of the transaction.
Remedies include an action for damages in fraud, negligent misrepresentation, or breach of duty.
Promoters can avoid personal liability if the exclusion of personal liability is clearly expressed in the contract.
A promoter has fiduciary duties to act in the best interests of the company and its future shareholders, ensuring transparency and avoiding conflicts of interest.
The articles of association become the company's constitution, forming a binding contract between the members.
The courts may recognize these rights or interests as enforceable against the company, provided they are not the subject of a written contract.
Promoters occupy a position of trust and are required to disclose all personal interests that might conflict with the interests of the company.
Once a governing body of directors is formed, the functions of the promoter come to an end.
It was established that no article can constitute a contract between a company and a third person, and rights in the articles can only be enforced by members.
As a general rule, companies are not liable to pay promoters' incorporation expenses unless expressly empowered to do so.
The Act no longer requires the objects of a company to be specified in its memorandum; they are deemed unrestricted unless stated otherwise in the articles.
The promoters were held liable for breach of fiduciary duty for not disclosing their profit and interest in the property sold to the company.
It states that a contract made by a person purporting to act for the company is binding on that person personally, as the company was not yet formed.
Disclosure must be made before the completion of the transaction out of which the profit is made or anticipated.
An adjudication order does not extinguish the promoter's liability for secret profits, and the company may prove in his bankruptcy.
Promoters are not trustees in the ordinary sense; their relationship is not that of trustee and beneficiary, but they do hold property in trust for the company.
Persons whose professional services, such as counsel, accountants, or printers of prospectuses, are engaged in the incorporation process are excluded from the definition of a promoter.
No, in the absence of an express contract, one promoter may not sue another for remuneration for services.
It is immaterial if the articles state the company shall defray preliminary expenses, as a company cannot be bound by undertakings made before its existence.
The syndicate sold the property at a profit without disclosing the discount they received, leading to a claim for repayment of the concealed amount.
A company acquires rights and obligations only upon incorporation; no rights or obligations exist from actions taken before incorporation.
No, a non-member cannot sue to enforce any provision in the articles, even if it confers a benefit to them.
No, the court has no power to rectify the articles even if they do not accord with the members' concurrent intention.
The case established that promoters must disclose any profits they are making from transactions involving the company, as failure to do so can lead to legal consequences.
Promoters are not agents for each other and are not liable for each other's acts at common law.
A person may become a promoter either before or after the company's incorporation, regardless of being a director.
The general duties of a promoter include preparing necessary documents for incorporation, such as the memorandum and articles of association.
