WorksheetsPROMOTERS AND PRE-INCORPORATION CONTRACT
Total questions: 20
Worksheet time: 12mins
The consequence of a promoter’s fiduciary duty is ........
the promoter must make full disclosure of his personal interest in the promotion process; and accordingly the promoter must disclose whether he obtained a profit as a result of the promotion of the company concerned.
the promoter must only make partial disclosure of his personal interest in the promotion process; and accordingly the promoter does not need to disclose if he does not want to.
the promoter has a choice whether to disclose to the company; and accordingly if the promoter choose not to he does not need to disclose the profit obtained as a result of the promotion.
the promoter must make full disclosure of his personal interest in the promotion process but does not need to disclosure how he obtained the profit.
Rescission of contract for breach of promoters' duties may not be ordered in one of the following situation. Which of the following is correct?
Ability to make restitution in integrum.
The court’s discretion under novation.
Non intervention of third party.
The company choose to affirm the contract, upon having discovered the true state of affairs.
"...... is another alternative remedy available to the company for breach of promoters' fiduciary duty and may be awarded especially when rescission of contract is not possible".
The above statement is referred to .......
Rescission of contract
Recovery of secret profit
Claim for damages
Five years Imprisonment
Fiduciary duties imposed upon a promoter are owed only to the .............
shareholder
company
creditors
investors
If there is a breach of duty by promoter, it is for the .......... to sue.
shareholders
company
creditors
investors
In the cases of Erlanger v. New Sombrero Phosphate [1873] and Habib Abdul Rahman, was a good illustration where the court ordered the contract to be .............. because the promoters had breached the duties to the companies.
rescinded
completed
affirmed
concluded
A promoter is under a duty of disclosure to an independent Board of Directors when ............
the promoters are members of the company
the promoters are officers of the company
the promoters are directors of the company
the members do not trust the promoters
A promoter is a person who ............
creates a separate legal entity
does marketing for the company
sues the company in contract
is a party to preparation of the prospectus of a company
Which of the followings are the remedies available to the company against a promoter for breach of his duties as promoter?
Rescission of contract
recovery of secret profit
claim for damages
Imprisonment
The company has a right to rescind a contract made on its behalf by a promoter, where the promoter had acted breach of his fiduciary duty. However, the right to rescind the contract will be lost if .....
The company will not proceed with the contract
The company is considered as rejecting or not accepting the contract done by the promoter
The third party has obtained or acquired a right over the property concerned, bona fide and for value.
The parties in the contract can be restored to its original position, and no fraud done by the promoter
Choose the best answer as regard to pre-incorporation contract.
A contract entered after formation of a company
A contract made by the director of a company
A contract made before the company receives its certificate of incorporation
A contract made by promoters after the issuance of certificate of incorporation.
Who cannot be a promoter?
A person who is convicted of any offence on connection with promotion, formation and management of companies
A person involving with fraud or dishonesty and punishable with imprisonment
A corporate person
A company can comes into existence without a promoter.
True
False
Which of the following is not the duty of a promoters.
Duty to disclose any profit or benefit
Duty to act bona fide
Duty to delegate his authority
Duty to make a full disclose
Only the ................. entitled to a remedy when the promoter is in breach of duty.
third party
company
investors
members
A partial disclosure made by the promoter is considered as a full and frank disclosure.
True
False
A disclosure to the company's shareholders can be made at a ...........
general meeting
creditors' meeting
statutory meeting
class meeting
Claim for damages can be obtained by the company if the company can prove that it had suffered losses.
True
False
Rescission of a contract means ....
to terminate a contract
to carry on with the contract
to start a new contract
The effect of a ratification of pre-incorporation contract made by the promoter, by the company after it comes into existence is ...............
binding, as if it had been entered into by the company at the time of the contract.
not binding, because the company not yet in existence.
