Question

Promoter
is not a trustee of the company, but
he stands in a
fiduciary
relationship.
Comment. ​

Answer 1

Answer:

A promoter is neither a trustee nor an agent of the company but he has a fiduciary relationship with the company. Fiduciary relation means a relation of trust and confidence. Therefore he is liable to disclose all the relevant facts and any secret profit made by him in relation with the formation of the company.

Explanation:

Answer 2

It stands in a fiduciary relationship due to various duties imposed.

• A promoter is an individual who does all of the initial task for the formation or promotion of a corporation.
• For this, one does not have to be involved in the company's initial formation; one who later assists in the flotation of its capital is also considered a promoter.
• There is no trust or principal in existence at the time of the individual's efforts.
• As a result, they are neither trustees nor agents of the corporation being encouraged. The Companies Act, on the other hand, imposes certain legal responsibilities on them.

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