Prnmntion of a Compang Promotion refers to the discovery of business opportunities and the subsequent organization of fZ nds, property and managerial abilityn rnto business concern for the purpose of ma profits therefrom.. Thus, promotion of a company filvolves: (a) discovery of an opportunity of profitable business, (b) detailed investigation te ascertain the practicability of tile idea, (c) persuading a number of persons to fonn a company, (d) estimating the requirement of capital and plammng the procurcmen of Finds' (e) acquisition of necessary assets including buildings. machinery, etc. (f) recn:itment of staff, and (gincorporahon of the cotnpmy
WHAT IS A PROMOTER?
The term 'promoter' has not been defined in company law, although the Companies Act, 1956 expressly uses to is tenn in various sections. It is a tenet used in business, meaning a person who conceives the idea of starting a business, plans the formation of a company to carry on the business amd actually brings the company into existence.
Palmer has defined a company promoter as "a person who originates a scheme for the formation of the company, has the Memorandttm and A Tticles prepared, executed and registered, and finds the first directors, settle the tenns of preliminary contracts and prospectus (ifany) and makes arrangements for advertising and circulating the prospectus and placing the capital."
A promoter may be an individual, a firm, an associanon of persons or a body corporate. But whether or not such i n dI, hi ml, etc. maybe termed a promoter' depends on whether he or they have actually performed the un of a promoter Merely being a signatory to the memormdum or providing money for the payment of formation expenses does not make a person liable as a promoter For instance, under Sec. 62(6) of the Companies Act, persons acting in a professional capacity to assist the persons: engaged in procuring formation of a company are not deemed to be promoters.
PROMOTER'S ROLE
To 'tome a company some people must first of all come together with the idea of fonning a company and act as the pioneers.: The initiative in this matter is generally taken by a few persons and they are known as promoters.
INCORPORATiCN OFA COMPANY 65
. x. yeomen e of the idea in estimate into the soundness and practicabili hof War ideal coL ctnecessarr- information regarding raw materials, equipment and and ensure the availability of all factors of production. and Emu in Vance for the initial financing of the company.