What do you mean by ‘Promoter’? What are the functions of promoters?

Ans.

COMPANY PROMOTER

Promoter is a person who desire to start or form a business undertaking. The forms of business undertakings are sole proprietorship, partnership or a joint stock company. If the above person takes initiative, to form a joint stock company. He will be said to be promoter of the company. Truly speaking a person is known as promoter of that company if it is incorporated.

According to Section 2(69) of the Companies Act, 2013, the term promoter means a person –

(a) Who has been named as such in a prospectus or is identified by the company in the annual ret m referred to in Section 92; or

(b) Who has control over the affairs of the company whether as a shareholder, director or otherwise; or

(c) In accordance with; whose advice, directions or instructions, the Board of Directors is accustomed to act.

Nothing in sub-clause (c) apply to a person who is acting merely in a professional capacity.

Who can be a Promoter ? – Promoter is one who undertakes to form a company with reference to a given project and to set it going and who takes the necessary steps to accomplish that purpose.

In brief it can be concluded that the promoter is usually an experienced industrial person, who with the help of a big team of advisors does all the primary functions necessary to form a company. He manages persons to become signatories to the memorandum and the first directors. H«< instructs and directs the team of experts to propose the memorandum, the articles and other necessary documents which are needed to be filed with the Registrar of companies. He arranges funds for the registration expenses and prepares a conducive atmosphere to get the initial capital for the company. Some other worries of a promoter are the situation of the registered office of the company, and to get necessary plant and complement etc.

FUNCTIONS OF PROMOTERS

Promoters have to do following works :

(1) To think about the formation of a company and try to fulfil the object.

(2) To consult the solicitors and experts with regard to formation of the company.

(3) To select the persons for first directors and signatories to the Memorandum of Association.

(4) To decide the name of the company.

(5) To take decision for capital of the company.

(6) If necessary, appoints underwriters.

(7) To fix, where the registered office of the company will situate.

(8) To prepare Memorandum of Association.

(9) To prepare Articles of Association

(10) To prepare Prospectus; if required.

(11) To select and contact bankers, auditors and legal advisors etc.

(12) To get certificate of incorporation.

(13) To publish the prospectus.

(14) To pay preliminary expenses.

(15) To arrange minimum subscription.

(16) To do necessary contracts and agreements necessary for smooth functioning of the company.

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