A promoter is personally liable on contracts made by him in the name of the unformed corporation: a. only if the corporation is never formed. b. if the promoter, the third party, and the corporation enter into a novation substituting the corporation for the promoter. c. only until the corporation is formed. d. even if the corporation adopts the contract.
Added by Andrew T.
Step 1
A promoter is a person who undertakes to form a corporation and takes preliminary steps to organize it. Show more…
Show all steps
Your feedback will help us improve your experience
Jennifer Stoner and 100 other Principles of Accounting educators are ready to help you.
Ask a new question
Labs
Want to see this concept in action?
Explore this concept interactively to see how it behaves as you change inputs.
Recommended Videos
2. A group of persons, called promoters have submitted an application to the Registrar of Companies, New Delhi for getting a company incorporated as a public company, Pending the Registrar's decision of granting certificate of incorporation, the promoters enter into certain contracts for the purchase of some assets for the proposed company. Explain the legal position of promoters' liability and the liability of the proposed company after its incorporation, in this regard
Jennifer S.
After part of the shares of a proposed corporation had been successfully subscribed, the promoter hired a carpenter to repair a building that was intended to be conveyed to the proposed corporation. The promoters subsequently secured subscriptions to the balance of the shares and completed the organization, but the corporation, finding the building to be unsuitable for its purposes, declined to use the building or to pay the carpenter. The carpenter brought suit against the corporation and the promoter for the amount that the promoter agreed would be paid to him. Who, if anyone, is liable?
Which of the following is CORRECT? a. A director may never be held personally liable for breaches of the Corporations Act made during the course of their directorship. b. A promoter may be personally liable for undisclosed profits earned during the course of their promotion. c. Shareholders are the directing mind and will of a company. d. All states and territories in Australia have separate Corporations Acts.
Akash M.
Recommended Textbooks
Horngren’s Cost Accounting
Cost Accounting A Managerial Emphasis
Principles of Accounting Volume 1: Financial Accounting
Transcript
Watch the video solution with this free unlock.
EMAIL
PASSWORD