COMPANIES ACT - 1963 (ACT 179)

    Section - 12 - Duties of Promoters

    (1) Any person who is or has been engaged or interested in the formation of a company shall be deemed to be a promoter of that company:

    Provided that a person acting in a professional capacity for persons engaged in procuring the formation of the company shall not thereby be deemed to be a promoter.

    (2) Until the formation of a company is complete and its working capital has been raised, the promoter shall,

    (a) stand in a fiduciary relationship to the company;

    (b) observe the utmost good faith towards the company in any transaction with it or on its behalf; and

    (c) compensate the company for any loss suffered by it by reason of his failure so to do.

    (3) A promoter who acquires any property or information in circumstances in which it was his duty as a fiduciary to acquire it on behalf of the company shall account to the company for such property and for any profit which he may have made from the use of such property or information.

    (4) Any transaction between a promoter and the company may be rescinded by the company unless, after full disclosure of all material facts known to the promoter, the transaction shall have been entered into or ratified on behalf of the company,

    (a) if all the company's directors are independent of the promoter, by the company's board of directors; or

    (b) by all the members of the company; or

    (c) by the company at a general meeting at which neither the promoter nor the holders of any shares in which he is beneficially interested shall have voted on the resolution to enter into or ratify that transaction.

    (5) No period of limitation shall apply to any proceedings brought by a company to enforce any of its rights under this section; but in any such proceedings the Court may relieve a promoter in whole or in part and on such terms as it thinks fit from liability hereunder if in all the circumstances, including lapse of time, the Court thinks it equitable so to do.