MSA Spring 2024

Question1.
A promoter is an individual or entity that helps start and establish a company by taking the first
measures to make the company exist. They are in charge of things like gathering the required
materials, drafting legal paperwork, and obtaining the first funding. Therefore, the promoter
creates the company as a separate legal entity and carries out all the tasks required for its
incorporation.

A) Three (3) duties of a promoter of a company are, fiduciary duty, issue of prospectus, and
disclosure of interest.
Fiduciary Duty: Promoters owe the company they are founding a fiduciary duty. This implies
that they have to behave honestly and in the best interests of the company, refraining from taking
advantage of their position for personal benefit at the expense of the company, and avoiding any
conflicts of interest.

Issue of Prospectus: One of the most important steps in starting a company is issuing a
prospectus. A formal legal document known as the prospectus provides prospective investors
with information about the company, its activities, financial results, and details of the offer.
Disclosure of Interest: