Obligations of Promoter under the Companies Act, 2013

Spread the love

The promoter of a company generally performs the following important functions in relation to the promotion of the company: –

  • Obtaining the certificate for starting the business of the company.
  • Organization of capital and other means for the purpose of setting up the company.
  • Coverage of preliminary expenses.
  • Arrange for the issuance of capital.
  • Selection of capable, competent and experienced persons for the appointment of directors.
  • Have the company incorporated and obtain the necessary certificate.
  • If the company is to be formed by buying an already existing business, then to have a correspondence and settle the contract with the sellers of the property.
  • Arrange the preliminary agreement with the underwriter, the seller of the property and the management agent, etc.
  • Determine the name, place of business, scope and objectives of the company.
  • Make arrangements for bankers, auditors, brokers and legal advisers, etc.
  • Prepare the main lines of Memorandum and the Articles of Association of the company.
  • Prepare the Company’s Prospectus and send it to the Registrar, and manage its advertising.
  • The promoter must not derive any secret profit from the promotion of the company.
  • The promoter must fully disclose all facts relevant to the business, including his/her interests and profits. According to Section 26 of the Companies Act 2013, the promoter’s profit must be disclosed in the prospectus itself.