Whaley Bridge Calico Printing Co v Green -
Promotion process involves:
- register the Co.
- enter into pre-incorporation conrtracts
- if public co, issue prospectus
- appoint directors, find shareholders
Definition of promoter (not found in 2006 Act):
Twycross v Grant - promoters are the persons who set it going
Whaley Bridge Calico Printing Co. v Green offers another definition
Promoters are fiduciaries. Fiduciary obligation are obligation owed to the principal to act with "loyalty and good faith in dealings which affect that person" (Penner)
Re Great Weal Pologooth - lawyers and accountant drafting constitution are not promoters
Court tend to leave the term "promoter" fluid so that it could catch as many fraudster as possible
For public companies, marketing of securities is strictly controlled by Financial Services and Markets Act 2000, and LR of FSA
In 2013, FSA is to be replaced by 2 bodies;
1) PRA - Prudential Regulation Authority
2) FCA - Financial Conduct Authority
*flotation (公司股票的〕發行﹐上市)
Promoter is not:
-agent: Kelner v Baxter. A person cannot be an agent of a nonexistent principal
- trustee: Re Leeds and Hanley Theatres of Varieties
- no secret profits. promoters are required to make full disclosures of any such profits
Erlanger v New Sombrero Phosphate - a syndicate bought mine, sold to co, did not disclose. New board bring action to rescind the sale
Held: contract is voidable, except:
i) Co. affirms (Re Cape Breton) (but Co. can still promoter to account for the secret profit)
ii) Co. delays in exercising its right to rescind (Long v Lloyd)
Also there ust be restitutio in integrum - it is possible to restore
Salomon v Salomon - if the board was not independent, disclosure of benefit should be made to the original shareholders
Gluckstein v Barnes - even disclosure to original shareholders might not be sufficient, if the scheme as a whole is designed to defraud the investing public it is not okay
Remedies
Sinclaire Investments (UK) v Versailles Training Finance Ltd
Target Holdings v Redferns - personal
Pre-incorporation contracts
problem: an agent (promoter) cannot bind a non-existent principal (Co.) to contracts
CL:
Kelner v Baxter: promoter of hotel buy wine, wine are consumed, hotel went liquidated.
The privity doctrine prevents rights and liabilities being conferred on the co. 1999 Act does not apply to pre-incorp contracts
Promoter: the hotel ratified the contract, I am not liable
Held: personal liable
Novation: co. to make a new contract with similar terms. ( Natal Land & Colonization v Pauline Colliery & Development Syndicate)
Re Patent Ivory Manufacturing, Howard v Patent Ivory Manufacturing: Novation might be inferred
Re Northemberland Avenue Hotel - novation is ineffective if the co. mistakenly believed that it is bound by it
Newborne v Sensolid -
Reform: s.51 2006: personal liable
Phonogram v Lane -Denning: in order for the promoter to avoid the personal liability, the contract must expressly provide for his exclusion
s.51 does not apply:
i) Oshkosh B'Gosh v Dan Marbel - misnamed existing co.
ii) Cotronic v Dezonie - the co. no longer exists
iii)
Braymist Ltd v Wise Finance -
the promoter could also enforce the contract
Freedom of establishment (EU cases)
Centros v Erhversus-or Selkabssyrelsen -
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