6.2 Promoters and Their Roles and Responsibilities

The meaning: the promoter = the person who undertakes the company's formation — the one who brings the company into being (the business idea's assembly, the documents' preparation, the capital's first gathering); the promoter's test (the formation's active role — not the professional's passive help (the lawyer-and-accountant's exempt advisory role)). The roles: the business's conception (the opportunity identified, the feasibility assessed); the documents' preparation (the memorandum-and-articles drafted, the subscribers procured); the statutory filings' management; the initial contracts (the pre-incorporation contracts — Unit 5.3's world); the capital's promotion (the first shareholders' solicitation within the securities discipline). The responsibilities (the fiduciary core — the exam's craft): the promoter as the FIDUCIARY of the company-in-formation: (1) the secret profit's prohibition (the promoter's personal gains from the formation disclosed — the undisclosed mark-up's returnable rule); (2) the conflict's disclosure (the promoter's own-interest transactions — the property sold to the company, the commissions received — all disclosed to the independent board-or-members); (3) the pre- incorporation contracts' personal burden (Unit 5.3 — the promoter's liability until the company's adoption); (4) the misstatement's liability (the prospectus's responsibility — Unit 5.6); (5) the winding-up's faces (the default-and-fraud liabilities of the formation era).