Promoters play an important role in the formation of a company. Explain.

A person who take lead to form the company is called a “Promoter”. 

As per Companies Act, 2013; Section 2(69) Promoter is defined as.

• A person who has been named in the prospectus or identified by the company in Annual Return or 
• Who has control on company’s affairs directly or indirectly whether as a shareholder, director or otherwise or 
• In accordance with whose advice, directions, or instructions, the Board of Directors is accustomed to act.

Role of Promoters:

• To conceive (discover) the idea of forming a business.
• To decide aims and objects of business, amount of capital, scale/size of business, etc.
• Drafting the ‘Memorandum of Association’ and ‘Articles of Association’.
• Drafting Prospectus to invite investors.
• To appoint first directors and first subscribers to Memorandum of Association and Articles of Association.
• To enter into ‘Preliminary Contract’ like hiring office premises, preparing and drafting Memorandum of Association and Articles of Association.