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
It has been said that "auditors cannot legitimately serve the 'user' public because they are hired and fired by the management of the company being audited. If management does not

Principle of floating charges: The general purpose of the rule is to prevent an unsecured creditor of an insolvent company from getting advantage over other creditors by obtai

Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4

Remuneration:             Article 108 provides that "a managing director shall receive such remuneration (whether by way of salary plus commission or may participation in earn

Define the Strategic Voting and Policy Process Now we take up an important issue with respect to policy process. In standard models, where a single vote is taken directly as re

Houghland, a passenger in one of McAnn's buses, had his suitcase stored in a luggage comp of the bus for a trip from Brisbane to Cairns. The suitcase was lost during the course of

Leases - Voidable Contracts However a lease granted to an infant is binding on him unless he repudiates it then within a reasonable time after attaining the age for eighteen.

Protection of General Public: It may happen that a resolution reducing a company's capital was passed in circumstances which indicate that the shareholders had not been proper

Illustrate the doctrine of judicial precedent? The doctrine of judicial precedent It states that higher court decision are binding on lower courts and like a result it i

Trade Unions:                   Trade Unions are registered under s.11 of the Trade Unions Act 1952 with the primary object of regulating the  relations between employees and