Can A Company Act As Promoter For Another?

Can a company serve as a promoter for another company? A promoter is an individual, entity, or organization responsible for conceptualizing the formation of a new company. This role can be fulfilled by a variety of parties, including individuals, firms, associations of people, and yes, even existing companies. In essence, a promoter plays a pivotal role in the early stages of a company’s creation, bringing together the necessary resources and ideas for its establishment. This information is relevant as of January 31, 2023.

Who Qualifies as a Promoter?

Promoters play a crucial role in the formation of a company, but not everyone who contributes to this process can be considered a promoter. Specifically, individuals who engage in professional roles are typically excluded from the definition of a promoter. For instance, a solicitor who assists in drafting the essential documents required for the establishment of the prospective company is not considered a promoter. Similarly, professionals like accountants or valuers who provide their expertise in support of the promotion but do so in their professional capacity are not regarded as promoters. In essence, the term “promoter” refers to individuals who actively and directly undertake the task of initiating and organizing the company’s formation, distinct from those who offer specialized services in a professional capacity to facilitate the process.