I can say, a promoter is a person that takes the first steps in forming a business. The promoters are not limited in their role and nature. The preparation of documents and the steps necessary to register a company is done by the promoters.

The Companies Ordinance 1984 and the Contract Act 1872 do not define the term “promoter”, nor does it provide any details on the various legal decisions that have been reached. Promoters are members that take on a project to form a company. The preparation of legal documents to be used in the registration process. They encourage people who are responsible to take on the role of first director. The 1984 ordinance for companies states that promoters can receive their preliminary expenses and remuneration. They may also receive money proportionate to their service. Pre-incorporation Contracts of the Company are divided into 4 main stages. Promotion, Incorporation, Raising Share Capital and Business Start Certificate. There are several types of Promoters: Professionals, Occasionals and Just Promoters. The Promoter of the Company is required to disclose in full all facts and figures relating to its formation. All this under certain conditions like disclosures must be real and express. They must also be made to persons who are acting in the best interest of those persons. The promoter of a company is responsible for all secret profits that he made during its formation.

The incorporation reality is not altered by the fact that the initiating corporation and promoter contract are not in the same condition. Instead, they join the contract to make the name and incorporate the company. The liability of a corporation can be incurred in four ways, including ratification, acceptance, continuing offer and renovation by the company, based on mutual agreement.

The position of Pakistan in terms of pre-incorporation agreement was similar to common law before the Companies Ordinance1984. In general, when two parties contract one another and there is no third party involved in the contract without terms of liability and enforcement, then the contract is invalid and company is not formed until the incorporation. Promoters may be held personally responsible for pre incorporation agreements. If the contract Act does not apply to a company that hasn’t accepted and taken on a contract before incorporation, the principle of common-law will apply. The promoter is liable under this law for contract violation.

USA Laws have a more effective solution to the Pre-Incorporation Contract problem than Common Law. The Common Law did not release the promoter of the pre-incorporation agreement from the liability of the contract.

I have concluded that promoters are personally liable under the pre incorporation contract because the company was not formed when the contract was made. As a result, the relationship between the mediator and principal never survived, nor did the company develop into a party. The company is not normally liable for pre-incorporation contracts when they are formed, but with the section arrangement the company can assume the rights and liabilities of the promoter. The promoter was also found to be personally liable for pre-incorporation contracts 1984.