Pre Incorporation Contracts the Liability of the Promoters and the Effect On Directors

By

ACKNOWLEDGEMENT

I would like to thank my supervisors, friends and family, without their support this research study would not have been possible.

DECLARATION

I adjudge that the entire content of this dissertation is entirely my own work; the content used in this dissertation has not been submitted before in any educational institution and represents my own opinion.

Signed __________________ Date _________________

ABSTRACT

The aims and objectives of this research are to analyse the UK legislation on the pre-incorporation contracts. It also aimed to identify the liabilities of the promoters in the pre-incorporation contracts, and the effects of the pre-incorporation contracts on the directors of the company. The research study is based on the issues related to pre incorporation contract and its effects on promoters and directors before the company is incorporated. In order to find more accurate results and the reliability of past researches, the method used to evaluate data and research study is secondary data collection technique. In the pre-incorporation contract the liabilities of promoters are of great significance. According to the secondary research following findings have been explored. It is the liability of the promoter to get involved in the formation of body, usually the organization according to the legal requirements of education, provision of seed capital. The Board of Directors may appoint one or more managing directors when this is provided for in the Constitutive Act or permitted by the Assembly. Originally, the Board of Directors examines and approves the strategic, industrial and financial plans of the Company and of the Group. The Board of Directors may set limits on the powers of ad. The law grants the Board of Directors may appoint an executive committee or one or more managing directors if required by the memorandum or permitted by the Assembly.The directors are responsible for making the decisions regarding the capital investment in the company therefore they are crucially concerned about the event of pre incorporation contracts in order to make appropriate decisions regarding the interest of the shareholders of the company.

TABLE OF CONTENTS

ACKNOWLEDGEMENTii

DECLARATIONiii

ABSTRACTiv

CHAPTER 1: INTRODUCTION1

Introduction1

Background of the Study1

Problem Statement3

Research Aims and Objectives4

Research Questions4

Rationale of the Study4

Significance of the study6

CHAPTER 2: LITERATURE REVIEW7

Introduction7

Directors8

Promoters9

Common Law-agent and Representation9

Common Law - Ratification10

Reform11

Shelf Companies12

Promoter as principal14

Conclusion15

CHAPTER 3: METHODOLOGY17

Introduction17

Research design17

Structure of the Research18

1. Topic19

2. Approach or formulation of the problem19

3. Objectives19

4. Theoretical Framework20

5. Timeline or Gantt chart21

6. Methodology21

Research methods22

Qualitative method (case study)23

Secondary Research Method24

Data Collection Methods24

Reliability and validity25

Ethical Consideration26

Summary of the Chapter27

CHAPTER 4: ANALYSIS AND DISCUSSION28

Analysis and Discussion28

Secondary Research Findings for Liabilities of Promoters28

Effects on Directors34

Role of the Board of Directors34

Impact of Pre-incorporation contract on Board of Directors35

CHAPTER 5: CONCLUSION AND RECOMMENDATIONS37

Introduction37

Conclusion38

Recommendations40

REFERENCES42

CHAPTER 1: INTRODUCTION

Introduction

            In this dissertation, we will have to present a discussion on the UK legislation regarding the pre-incorporation contracts. We will also evaluate if the promoters are liable for the pre-incorporation contracts or not. After that, we will be looking on the effects which the pre-incorporation contracts have on the directors of the company. The paper will review the current and ...