students online tutorial cl c5
TRANSCRIPT
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Who is a promoter?
Sec 4(1) CA – in relation to a prospectus
issued by or in connection with a
corporation, means a promoter of the
corporation who was a party to thepreparation of the prospectus or of any
relevant portion thereof; but does not
include any person by reason only of hisactin in a professional capacity
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Who is a promoter?
!"romoters# include controllin
shareholders, persons connected to
controllin shareholders and e$ecutive
directors who are substantial shareholdersof the issuer
(Prospectus Guidelines – issued by SC)
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Promoters Duties
%uties in relation to submission proposals
and prospectus – C&SA
%uty in relation to submission of proposal
and to refrain from ma'in false and
misleadin statements
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Pre-incorporation Contracts
At common law, a company is not bound bypreincorporation contracts since a principalwho was not in e$istence at the time the
contract was sined cannot be bound by apurported aent
Sec *+ CA however allows preincorporation
contracts and other transactions entered intobefore the company came into e$istence tobe ratified by the company in order to bind thecompany
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Pre-incorporation Contracts
Any contract or transaction purported to beentered into by a company before itsincorporation may be ratified by the
company after its formation and thereuponthe company shall become bound by it –Sec *+(1)
he ratification shall cause the contract tobe effective as from the date of the contractwas sined or entered into Sec *+(1)
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Pre-incorporation Contracts
-efore the ratification, the person who
purported to sin or enter into the
transaction on behalf of the company shall
be personally bound by the transaction orcontract
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Form of Contracts
Sec *+ (4)
Contracts on behalf of the company may
be made as follows –
&ay be made on behalf of the company in
writin under the common seal of the
company
&ay be made on behalf of the companysined by any person actin under its
authority e$press or implied
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Corporate Seal
.very company must have a common seal
– Sec 1/(+)
he company number and name will
appear on the seal
he seal shall only be used by authority of
the directors or of a committee of the
directors authori0ed by the directors
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Corporate Seal
he articles usually provide that every
instrument to which the seal is affi$ed
shall be sined by a director and
countersined by the secretary or asecond director or by some other persons
appointed by the director for the purpose
Affi$ation of the common seal must bedone in accordance with the articles
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Questions and Answers
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Promoter and Pre-
incorporation Contracts
Ali is the brother of -a'ar who has a controllinshare in -i &ac -erhad Ali is an accountantand assisted in the preparation of theprospectus durin the flotation process of -i&ac hile preparin the prospectus, Alineliently made some mista'es and omitted toma'e some disclosures
hat are the offences Ali is uilty of2
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Promoter and Pre-
incorporation Contracts
Answer
!"romoters# include controllin shareholders,
persons connected to controllin shareholders ande$ecutive directors who are substantialshareholders of the issuer 3n this case, Ali is aperson connected to a controllin shareholder of-i &ac -erhad
%uties in relation to submission proposals andprospectus – Sec */ C&SA
%uty in relation to submission of proposal and torefrain from ma'in false and misleadinstatements Sec 4/ C&SA
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Promoter and Pre-
incorporation Contracts
Ali, a promoter of A-C -erhad entered into acontract with 567 -erhad on 1 8ebruary 99:before A-C was incorporated 567 -erhadsouht to sue Ali for the amounts owin underthe contract he contract was ratified by A-C-erhad on 1 une 99: 3s the contract enteredinto prior to the incorporation of A-C valid2
Answer
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End of
Chapter 5 @ MAICSA All !i"hts !eser#ed
www.maicsa.org.my