Promotion

Promotion is a term of wide import denoting the preliminary steps taken for the purpose of registration and floatation of the company. The persons who assume the task of promotion are called promoters. The promoter may be an individual, syndicate, association, partnership or company.

Who is a promoter? This term has not been defined under the Act, although the term is used expressly in Ss. 62, 69, 76, 478 and 519.

An attempt to define exactly what a promoter is was made by Cockburns, C.J., in Twycross v. Grant who described a promoter as ‘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. Another attempt was made by Bowen, L.J., in Whaley Bridge Printing Co. v. Green. He observed, the term promoter is a term not of law but of business, usefully summing up, in a single word a number of business operation familiar to the commercial world by which a company is brought into existence.

Perhaps, the true test of whether a person is a promoter is whether he has a desire that the company be formed and is prepared to take some steps, which may or may not involve other persons, to implement it. However, persons assisting the promoters by acting in a professional capacity do not thereby become promoters themselves. The solicitor who drafts the Articles, or the accountant who values assets of a business to be purchased, are merely giving professional assistance to the promoters. If, however, he goes further than this, e.g., by introducing his client to a person who may be interested in purchasing shares in the proposed company, he would be regarded as promoter.