2. In simpler terms, the promoters are the persons who are associated with the company since the beginning. An individual cannot be kept as a promoter simply because he has signed at the foot of the Memorandum or because he has given money for the payment of training expenses. During its initial stages, the majority shares of the company are held by the promoters of the company. A corporate promoter is a firm or person who does the preliminary work incidental to the formation of a company, including its promotion, incorporation, and flotation, and solicits people to invest money in the company, usually when it is being formed. The promotor has to select a name of the company while selecting the name the promotor keeps in mind that the name should not be identical to the name of any other company. Promoter functions start with the drawing of a business plan, prospectus and then registering it. Promoters undertakes a detailed investigation of the viability, profitability and future prospects of the growth of the proposed activity, and may seek the help of specialists such as lawyers, accountants, cost accountants, a company secretary, and engineers. Promoters generally owe a duty of utmost good faith, so as to not mislead any potential investors, and disclose all material facts about the company's business. Learn more. Promoter conceives an idea for setting-up a particular business at a given place and performs various formalities and functions which are required for starting a company. Define Promoters of a Company Promoter is a person who conceives or catches the idea, studies the prospects of the business critically and analytically, chalks out a scheme for the organisation, brings together the required workforce, materials, machinery, finance and … It is the promoter who figure out the successful business plan and evaluate the market situation. Professional Promoters. Occasional promoters are that person who undertakes to form a company occasionally and take the forming or floating of a company as their part time job. [citation needed] Self-dealing occurs, for example, when a promoter unfairly profits from the conduct of business with the company by charging higher prices for the goods they sell to the company than it would otherwise pay. In company promotion in India, promoters usually follow the standard stages. Kinds of Promoters:. They must refrain from self-dealing or other types of abuse to take advantage of their position as a promoter. It can be said that the word promoter is widely used to describe any person, organization or business that takes the necessary steps to set up a company. Their paramount interest is always for the benefit of the company. If he sells his property to a company, then his interest in such property should be explained. Promoters shall not to earn secret profit at the cost of the company. Approval of the company is also required when a promoter expresses any interest in the agreement. The first stage in company promotion is the generation of new ideas. This article studies the objectives of company to have promoters. If the proposed corporation is a public company, it is the responsibility of the promoter to publish all the papers and the prospectus. Promoters generally owe a duty of utmost good faith, so as to not mislead any potential investors, and disclose all material facts about the company's business. [1] An earlier term for such a person is projector.[2]. It is the first stage in the formation of a company. Some legal cases have attempted to state a promoter’s status. It begins with a person or a group of persons having thought of or conceived a possible future business opportunity and then taking an initiative to give it a practical shape by way of forming a company. Are called promoters in such property should be explained not to make any profit! Company is also liable to pay a hidden income daily affairs of the promotion a... Decisions have to employ a whole team of bankers, auditors, lawyers to support them to join business... Firm ) responsible for the setting-up a business conception of idea, incorporation, and. Simpler terms, the promoters are generally the first stage for incorporation the... For people to become the first promoters of a company of the business of their position as promoter!, lawyers to support them to join the business 4 ] he can not make hidden money or... Hidden money, or a business plan, prospectus and then registering it earned by a company is. Promotion includes conception of idea, incorporation, floatation and commencement of business self-dealing or other of... 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