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
Special interest groups and policy decision Special Interest Groups, either of voters or the prospective contesters, play an important role in policy process, especially under

Legal Environment of Business Inventions "R Us (IRU) advertises invention development services and has aggressively advertised its services on-line, in magazines, and on radio

Advantages of Stare Decisis - Certainty and Predictability However the doctrine of stare Decisis includes an element of certainty and uniformity in the administration and mana

QUESTION (a) What is a contract and what are the elements of a valid and enforceable contract according to English Law? (b) List down 5 main documents which form part of a b

Meetings and Resolutions: Company General Meetings  These are held from time to time in order: (a)   to comply with statutory provisions which require certain general me

QUESTION (i) Write on the health and safety issues in the hospitality industry (ii) Describe the hierarchy of courts in Mauritius and explain what you understand by the doct

QUORUM: However a quorum is the minimum number of persons who must be present at a meeting in order that the meeting may validly transact the business for that it was convened

Duties or Obligations of Hirer However these are not provided in the Act although are usually found in such the agreement itself Like: a) Take delivery: whether upon ente

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

Accuracy of the managers certificate: Was it the duty of the auditors to test the accuracy of the manager's certificate by a comparison of the figures in the books, and were t