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Chapter 4 Mindmap

This document discusses pre-incorporation contracts, the incorporation of a company, and the effects of incorporation. It notes that [1] promoters have fiduciary duties before incorporation such as disclosing any profits from promoting the company, [2] before incorporation a company cannot enter into contracts so the promoters are responsible, and [3] incorporation legally recognizes the company and subscribers as a separate legal entity from the date of incorporation stated on the certificate.

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15 views2 pages

Chapter 4 Mindmap

This document discusses pre-incorporation contracts, the incorporation of a company, and the effects of incorporation. It notes that [1] promoters have fiduciary duties before incorporation such as disclosing any profits from promoting the company, [2] before incorporation a company cannot enter into contracts so the promoters are responsible, and [3] incorporation legally recognizes the company and subscribers as a separate legal entity from the date of incorporation stated on the certificate.

Uploaded by

athirah azman
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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TOPIC 4: PRE-

INCORPORATION CONTRACTS
& INCORPORATION OF
COMPANY
Duties of Promoters
•Fiduciary relationship
•Duty to disclose to the company any profit which he
may secure
•Independent board of directors
•Existing or intended shareholders

REMEDIES FOR BREACH

Where a promoter fails to make a full and proper disclosure


of a profit made by him out of the promotion
® Rescission of contract
® Recovery of secret profit
® Damages for breach of fiduciary duty

PRE-INCORPORATION CONTRACTS

® contracts made before a company is incorporated. As


the company has no physical nor legal capacity then to enter
into any transactions, the promoters are responsible for
acting for the company
® A company has no contractual capacity prior to
incorporation - so contracts cannot be made on its behalf.
® A company can only enter into contracts from the time
of its incorporation.
® Before incorporation, company is not a separate entity
and therefore it is incapable of gaining contractual rights or
incurring liabilities.

INCORPORATION OF COMPANY

Legal recognition – section 16(5)


On and from the DATE OF INCORPORATION specified in the
certificate of corporation... the subscribers to the
memorandum together with such other persons as from time
to time become members of the company SHALL BE A BODY
CORPORATE by the name set out in the memorandum

EFFECTS OF INCORPORATION

1. SEPARATE LEGAL ENTITY


2. CAN SUE OR AND BE SUED
3. LIABILITY TO OWN PROPERTY
4. LIMITED LIABILITY ON MEMBERS
5. PERPETUAL SUCCESSION
6. POWERS OF A COMPANY
7. A COMPANY ACTS TROUGH ITS AGENT
PROCEDURE OF INCORPORATION
OF COMPANY
1. Form 13A
1. Name Reservation
1. Pre-Incorporation Documents

SUBSCRIBERS TO MEMORANDUM
i.Sec. 14(1) – requires 2 or more to subscribe their
names in MoA.
ii.Full name, addresses and occupation of the
subscribers
iii.Share capital company – subscribers must agree to
take the numbers of shares in capital.
iv.State the number of shares (>1) in handwriting.
v.subscribers must sign the memorandum in the
presence of at least one witness
vi.Must sign the MoA in presence of >1 independent
witness.
vii.Subscribers must sign the AoA as procedures
required in MoA.

SUBSCRIBERS AS MEMBERS

•Deemed to have agreed to become members


•In its register of members.
•Even if the subscribers are not entered in the register of the
members.
•A subscriber to the memorandum cannot, after the issue of
the certificate of incorporation by the Registrar, repudiate his
subscription on the ground that he was induced to join the
company by the misrepresentation of the promoter

CERTIFICATE OF INCORPORATION

®•F8 - Public Co.


•F9 - Private Co.
•Contents
i.Company number.
ii.Company name.
iii.Date of incorporation.
iv.The type of company that has been set up e.g. limited by
guarantee or an unlimited company.
v.The company’s status e.g. private or public.

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