What are the four main steps in the formation of a company?

Promotion of Company, Incorporation or Registration of Company, Floatation of Company, Commencement of Business.

The promoter of a company assumes responsibility for ___ relating to the formation of the company.

All matters

True or False: A promoter can make a profit during the formation of the company without disclosing it to the shareholders.

False. A promoter must make a full disclosure of all material facts and cannot secretly profit.

Fill in the blank: A promoter occupies a ___ position with the company and the shareholders.

Fiduciary

What is the primary role of a promoter in the context of company formation?

To initiate the process of forming a company and take necessary steps to accomplish that purpose.

Riddle: I help create a company but am not an agent or trustee. I must act honestly and disclose all. Who am I?

A promoter

What must a promoter account for in relation to the company?

Any money that is secretly received by him.

Fill in the blank: A promoter is neither the ___ nor the ___ of the company.

Trustee, agent

In the absence of the principal, a promoter cannot represent the principal because ___ has not yet formed.

The company

Short Answer: Why must a promoter act honestly during the formation of a company?

Because of the fiduciary relationship, where trust and full disclosure of material facts are required.

Promoters must disclose all facts relating to a property sold to the company to whom?

An independent and competent Board of Directors.

If a promoter sells property to the company without disclosure, what can the company do?

The company may rescind the contract.

True or False: A promoter can sell property to the company at any price without consequences.

False. The price must be disclosed, and if not, the company can rescind the contract.

Where must remuneration paid to the promoter be disclosed if it occurs within two years preceding the date of the prospectus?

In the prospectus.

Fill in the blank: If the company rescinds the contract for undisclosed profits, the promoter may be required to pay ___ to the company.

Damages.

What is one common way a promoter receives remuneration for their work?

Sale of their own property to the company at an inflated price.

Riddle: I am the agreement between a promoter and a company, often involving property and profits, but if secrets are kept, I can be undone. What am I?

A contract.