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promoter help

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA LW Exams › promoter help

  • This topic has 3 replies, 2 voices, and was last updated 6 years ago by MikeLittle.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • April 14, 2019 at 2:13 am #512319
    kingkongsajang
    Member
    • Topics: 95
    • Replies: 75
    • ☆☆

    If a promoter is someone that creates a company by undertaking all the steps necessary,

    why is one of its duties creating a company by acting under instructions?

    Aren’t they itself, the one creating the company?

    Thank you sir

    April 14, 2019 at 6:18 am #512330
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23321
    • ☆☆☆☆☆

    If you wanted a company for your own purposes (I’m talking about you, Kingkongsajang) you could create one and thus become a promoter.

    But then would you want another for yourself? Probably not

    Now, your friends, hearing about how Kingkongsajang has formed his own company, call you and ask if you would create one for them too

    You ask about potential names for the company, whether it’s to be public or private, who is to be appointed as a director, what is the proposed capital structure ……

    And you create a company for them.

    Can you see that you were acting under instruction?

    April 14, 2019 at 10:50 pm #512434
    kingkongsajang
    Member
    • Topics: 95
    • Replies: 75
    • ☆☆

    1. What is the incentive in creating a company on behalf of another person?
    i.e acting under instruction to create the company for them?

    2. So a promoter is someone that creates a company, whether it is their own company (for myself) or acting under instruction (for someone else)?

    Thank you sir

    April 15, 2019 at 7:55 am #512660
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23321
    • ☆☆☆☆☆

    1 Imagine this conversation between you (K) and me (M)

    K “Hi M. I hear that you’ve just created a company for yourself. Because I too want a company of my own, I was going to ask someone to do it for me. Could you create one for me?”

    M “Hi K. Yes I’ve just created Mike Little Limited and, yes, I could create one for you too. How much would you be prepared to pay me for my time and expertise?”

    K “Oh – I hadn’t expected to pay you!”

    M “Well, it’s not worth my while to do it pro bono, sorry”

    K “OK, I’ll pay you $100”

    M “That’s fine. Now, I’ll need some details from you … the proposed name, address, share capital, directors ….”

    OK? There you have the motivation / incentive for the promoter (me!) whilst acting under the instructions of someone else (you!)

    2 You posted “So a promoter is someone that creates a company, whether it is their own company (for myself) or acting under instruction (for someone else)?”

    That is correct

    This is one of many definitions (this a quotation from Justice C. J. Cockburn):

    “A promoter is the one, who undertakes to form a company with reference to a given object and sets it going and takes the necessary steps to accomplish that purpose”

    OK?

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