Have you heard of a Promoter in the Corporate context or even wondered what their roles are? Today is all about Promoters!

Section 85 of CAMA describes them to be people that help in forming a company and take the necessary steps to accomplish the purpose. They may or not intend to be part of the company. For example, people that help in raising capital for the company. People acting in their professional capacity to form the company are not promoters.

The promoter is in a position of trust and must act in good faith towards the company in any transaction with it or on its behalf. If it fails to and there is any loss suffered, the Promoter must compensate for the loss suffered. The Company can sue the Promoter for a breach of the trust relationship at any time.

He is to account to the company at all times and disclose any profit made from the promotion. The relationship is likened to an agency relationship but is not an agency because the company cannot have agents before it is formed.

Note that transactions entered between by the promoter for the company will be binding on the company if the transaction was approved by the company (its directors or members).

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