Ratifying of pre-incorporation contract
This query is : Resolved
17 February 2011
Dear all,
One of the promoter of the Company (public Limited), which is proposed to be incorporated had purchased a land for the Company, by executing the Contract on behalf of the Company.
But he has made the payment to the other party by getting loan from another Company.
The arrangement was in such a way that the Loan made by the promoter shall be repaid by the Company which is to be incorporated.
So, now can the Company can ratify the agreement after its incorporation and pay the loan that has been made by the promoter.
Kindly reply at the earliest.
One of the promoter of the Company (public Limited), which is proposed to be incorporated had purchased a land for the Company, by executing the Contract on behalf of the Company.
But he has made the payment to the other party by getting loan from another Company.
The arrangement was in such a way that the Loan made by the promoter shall be repaid by the Company which is to be incorporated.
So, now can the Company can ratify the agreement after its incorporation and pay the loan that has been made by the promoter.
Kindly reply at the earliest.
Jayashree S Iyer
(Expert)
17 February 2011
The company cannot ratify the pre-incorporation contracts. The promotor is personally liable for all pre-incorporation contracts.
Since the company is yet to be incorporated, the land can be purchased in the name of the promotor who paid the money through borrowing.
After the formation of the company the promotor can sell the land to the company and get the payment from the company.
Since the company is yet to be incorporated, the land can be purchased in the name of the promotor who paid the money through borrowing.
After the formation of the company the promotor can sell the land to the company and get the payment from the company.
20 July 2025
Yes, the company can ratify the agreement after incorporation and repay the loan advanced by the promoter. This ratification makes the contract binding on the company going forward.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Depreciation Chart Companies Act
- GST Audit whether Govt Companies are exempt?
- PTRC Show Cause Notice on Email
- Accounting treatment of AMC alongwith the purchase of Laptop
- Unable to File TDS Q2 Return – New TRACES Portal Error
- Capital Gail Exemption Certificate
- Taxation of crypto futures in India Fy 2026- 2027
- EPF ECR NEW RULES Sep 17th 2026
- Not ordinarily resident having partnership income in India and salary in USA is any form to filed be
- Issuing of delivery challan by seller of goods
- GST Treatment of Purchases with GST Paid where Outward Supplies of Manufactured CattleFeed Exempt
- Expert Help Required for TDS Refund 100000 Through TRACES – AY 2022–23
- IMPORT PURCHASE ENTRY PASSED IN BOOKS OF ACCOUNT
- FAST DS 26 Undisclosed Foreign Asset Disclosure Scheme 2026
- Regime change
- Goods sold but invoice not issued
- Tally: Imported bank entries do not show up in manual reconciliation
- Sales of goods of amount Rs97 lakhs to a party
- Confused About My Career After 12th — Cyber Security, AI or Finance? Need Guidance
- FAST-DS 2026 Under Tax Law - No recourse or support for person declaring via this scheme?
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
