A promoter for a company can be an individual who performs all the initial duties that are essential to bring the companies into existence. They are the people that conceive the idea and introduce it to the people to induce them to join the company in a specified role.
As per companies Act, 2013 following people are treated as promoters:
A promoter of a company is neither a trustee or an agent of a company they have a simple fiduciary duty to follow. The trustee has to disclose all the facts about any secret profit that is made by him while forming the company.
There are certain liabilities that the promoter has under companies act 2013
The promoter of the company will be liable for imprisonment for a term that may extend for 2 years and a fine which may go upto Rs.50,000 for any untrue statements made in the prospectus.
Promoters have to prepare a scheme for the formation of the company and in that event following are the role of the company:
The role of promoters comes to an end once the board of directors have been formed and they take over as the governing body of the company. Once the control is transferred to the directors of the company the fiduciary duty as well as other extensive duties of the promoter comes to an end.
The promoter of the company is obligated to bring the company into existence and to ensure the successful running, the promoter has to enter into contracts with various parties himself as the company is not in a legal existence he has to enter into contract himself, and these contracts are called 'Pre-incorporation Contract'
The status of such a contract is different from others that entered after the company incorporation. The contract will be introduced between the interested party and the promoter but later on, when the company comes into existence the liability of promoter will cease to exist.
Any contracts that the company forms after incorporation of the company are the obligation of the company and any liability that might arise out of it will be the responsibility of the company completely.