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Promoter Remuneration

Member (Account Deleted) Guest , 05 August 2008  

The remuneration of a promoter, may be paid in cash or partly in cash and partly in shares and debentures f the company.

But in the absence of an agreement with the company after its incorporation a promoter can not file a suit in a court of law for the recovery of his remuneration and other preliminary expneses incureed by him because he acted for a person who is yet to take birth and therfore there can not be any binding contract in the absene of consensus an idem between the two parties.

Thus, even where the AOA provide that the company shall reimburse the expneses incurred by the promoters, or to pay remuneration to the promoters after incorporation, such a provision in the AOA is not binding on the comapany. AOA is only power giving document not give the right to utilize this power.

For reciving his remuneration and all expenses a contract with company has to be made after its incorporation by a resolution passed in metting of BOD. 

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Member (Account Deleted)
(Student CA IPC / IPCC)
Category Corporate Law   Report

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