Question

Which statement is true about promoters?

Answer 1

Answer:

d. handle Preincorporation transactions.

Explanation:

Promoters are those who undertake in the setting up of a company. They also does the Preincorporation work before the company is set up like floatation, incorporation, promotion and seek people's help to invest money in the formation of the company.

Stages involved in the formation of a company are

-Promotion,incorporation,capital set up and final commencement of business. The work of a promoter here is the promotion promotion of the company to be set up.

Promoters perform some other functions like identifying business ideals, investigation of business to be formed, ensure name approval and preparing documents necessary for the formation of the company.

Some of the liabilities of promoters are as follows;

- Exercise due diligence and care while performing as a promoter

-Responsible for handling Previous corporation contracts

-Secret profit should not be made by a promoter prior to the setting up of the company

Answer 2

Answer: D. Handle preincorporation transactions.

Explanation: The only true statement from the options is that promoters "handle preincorporation transactions".

Preincorporation transactions are daily occurrences in a corporation are said to be the lifeline of the corporation. It is done by promoters entering an agreement or contract relationship with a third party on behalf of the corporation.