Abstract

The Companies Act 1956 gives no meaning to the word promoter & although the meaning is defined in sections 62, 69, 76, 478 and 519. Section 62 of the Companies Act 1956 defines the word for this purpose only. Section 62(6)(a) defines the term promoter as partners involved in the preparation of the prospectus or any part of it that contains false information; company. According to article 300, if the court decides that a person has made a report that he has cheated in the promotion or establishment of a company, the partners will be treated like any other director or officer of the company. The Madras High Court in Prabir Kumar Misra v Ramani Ramaswamy [2010] 104 SCL 174 ruled that the project owner does not need to be the person signing the Memorandum of Understanding/Articles or the owner or director of the company to determine responsibility. The sponsor's liability to the company towards third parties continues depending on the acts and agreements concluded by the agency or representative of the company during the period prior to participation.

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