Legal status - promotion, Business Law and Ethics

Legal Status:

 A promoter is not an agent of the company he promotes.  However, the English courts have held that he stands in a fiduciary relationship to the company he promotes, just as an agent stands in a fiduciary relationship to his principal: Re Leeds & Hanley Theatre of Variety (21).

Duties

 In Gluckstein v Barnes (22) it was stated that a promoter is under a legal duty to disclose to the company any profits or financial benefits, that he derives from the promotion. In other words, he cannot make a secret profit out of the promotion just as an agent is not allowed to make a secret profit from the agency.

The disclosure to the company is made to:

(a)     an independent board of directors that is not composed of, or dominated by, the promoters' stooges or cronies, failing which,

(b)     the company's members (usually those invited by a prospectus to purchase the company's shares).

If a promoter fails to make the requisite disclosure the company may -

                   (i)      repudiate any contract entered into between it, and the promoter, or

                   (ii)     recover the secret profit from the promoter, as illustrated by Gluckstein v Barnes.

Posted Date: 1/12/2013 2:15:40 AM | Location : United States







Related Discussions:- Legal status - promotion, Assignment Help, Ask Question on Legal status - promotion, Get Answer, Expert's Help, Legal status - promotion Discussions

Write discussion on Legal status - promotion
Your posts are moderated
Related Questions
Question 1: (a) "A tourist resort which does business in a single currency is not exposed to currency risk." Discuss (use example to support your answer). (b) Case: Hedging

3 ways in which the restaurant can engage in socially responsive activities in the community within which it operates.

Question 1: i) What is the rationale of centralized and decentralized bargaining? ii) Give examples of benefits associated with centralized bargaining. iii) Give exam

Glenda has taken a household insurance on her classic Queenslander home in North Queensland.  At the time of application, the insurer "URINSURED" asked various questions regarding

United Nations Convention on the Law of the Sea The rights over the sea were extended by the United Nations Convention on the Law of the Sea (UNCLOS) adopted in 1982. The UNCLO

State in brief about the term - Reputations Reputations can be defined as the actions an agent and expected to take. If he takes it up, he establishes his reputation or otherwi

Describe the term- higher national income and interest rate This causes country B to adjust to point B with both a higher national income and interest rate. At this point the f

What is the difference between the plain meaning and the liberal approaches to the interpretation of contracts? Provide me with an example of each to show me you understand the dif

The work of the International Labour Organisation in regard to the adoption and implementation of Conventions and Recommendations involves Member States in a number of constitutio

Several rules for Fraudulent trading: Various rules have been established to determine what is fraudulent trading: (a) Only persons who take the decision to carry on the co