PROMOTER

Promoter means a person or persons who promote the company. Promoter may be a natural or artificial judicial person. There is no particular definition in the companies act regarding promoter. A person becomes promoter by his act and responsibility he bears. A promoter does various types of activities which are directly and indirectly useful for formation of a company.

A promoter basically does the following types of activities:-

Ø  Promoter originates the scheme for the formation of a company.

Ø  Subscribe to the memorandum.

Ø  Memorandum and articles are prepared, executed and registered.

Ø  Finds the bankers, broker and legal advisers.

Ø  Finds the first director.

Ø  Settles the terms of preliminary contracts with vendors and agreement with underwriters, and makes arrangement for preparation, advertisement and circulation of the prospectus and placement of the capital.

Section 2(69) of the companies act. 2013 define the promoter as follows:

                Promoter means a person-

(a)    Who has been named as such in a prospectus or is identified by the company in the annual return referred to in section 92. Or

(b)   Who has control over the affairs of the company, directly or indirectly whether as a shareholder, director or otherwise. Or

(c)    In accordance with whose advice, directions or instructions the board of directors of the company is accustomed to act.

Provided that sub-clause (c) shall not apply to a person who is acting merely in a professional capacity.