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
Registers and documents - registered office: The following registers and documents are also kept at the company's registered office:- i.             The register of members

Personal rights invaded:                    A shareholder may sue to protect from invasion their own individual rights as members.  This is illustrated by Pender v Lushington

Determine the Complexities of the policy process Complexity of the policy process, affects the form of delegation of powers to the agents by the principal. When there are a lar

Assignment of Share in Partnership Whereas as has been stated, never new partner may be bring in without the consent of all other partners as well like accordingly no partner

Discuss about the three streams There come times, however, when these three streams are joined. An event in the political stream, such as a change in administration, calls for

Members voluntary winding up: In a members' voluntary winding up the creditors play no part since the assumption is that their debts will be paid in full.  There is no committ

Both Sudan and the US are signatories to the "New York Convention."  A Sudanese company has won its case in a Sudanese arbitration panel.  The U.S. company has declined to pay this

PENALTY FOR IMPROPER APPOINTMENT:           S.161 (4) provides that if any unqualified person is appointed as auditor, the person appointed, the company and every officer i

Question 1: i) What are the main characteristics of good faith bargaining? ii) What are the main criteria used in the US labour relations system to test good faith bargain

QUESTION Miss Titch Herr, a newly appointed education officer, starts her day at No Nonsense State Secondary School (NNSSS), an institution wholly subsidized from public funds