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Explain the preliminaries incidental to promotion of a company.

      

Explain the preliminaries incidental to promotion of a company.

  

Answers


Martin
(a)
- Ascertainment and determination of the company's name. This is necessary before the application or reservation of the name is made to the registrar.
- Determination whether the company is public or private. This is critical as it affects the contents of the articles of association.
- Determination whether liability is limited by shares or guarantee. For trading companies liability is limited by shares while non-trading companies are limited by guarantee.
- Determination whether the company shall have a share capital. This depends on:
- Whether liability is limited by shares or guarantee.
- Intention of promoters.
In law, promoters are not entitled to remuneration for incorporating a company for the simple reason that the company did not engage their services. However, promoters may be rewarded in other ways:
- acting as commission agents.

- being appointed the first directors of the company.
- being afforded the opportunity to take up extra shares at par value after market value has risen.
- being offered deferred or founders or management shares.
- upon disclosure, a promoter is free to sell overvalued assets to the company for a profit.
- upon, disclosure a promote is free to sell overvalued assets to the company is return for fully paid shares of the company.

(b) In law, promoters are not entitled to remuneration for incorporating a company for the simple reason that the company did not engage their services. However, promoters may be rewarded in other ways:
- acting as commission agents.

-being appointed the first directors of the company.
-Being afforded the opportunity to take up extra shares at par value after market value has risen.
- being offered deferred or founders or management shares.
- upon disclosure, a promoter is free to sell overvalued assets to the company for a profit.
- upon, disclosure a promote is free to sell overvalued assets to the company is return for fully paid shares of the company.

marto answered the question on February 7, 2019 at 07:21


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