Promotion of Companies and Pre-Incorporation Contracts

Who is a Promoter?

By virtue of S85 CAMA, a promoter of a company is any person:

• Who undertakes to take part in forming a company with reference to a given project and to set it going; and
• Who takes the necessary steps to accomplish that purpose, or who, with regard to a proposed or newly formed company, undertakes a part in raising capital for it.

Proviso: a person acting in a professional capacity for persons engaged in procuring the formation of the company is not a promoter.

Can a Person Become a Promoter After Incorporation?

Yes. It is possible to become a promoter of a company already registered if, for example, a person assists a newly formed company to raise capital, manpower, etc.

Can a Corporate Body Be a Promoter?

Yes. An existing company (except one in liquidation) may be a promoter of another new company if it carries out the activities of a promoter – S20(4) CAMA.

Can a Foreign or Alien Company Be a Promoter?

Yes. An alien or a foreign company may join in forming a company – S20(5) CAMA.

Promoter’s Activities

For a company to come into existence, there must be persons who would promote and float it. Promotion activities usually involve:

• Fund raising
• Obtaining requisite permits
• Packaging of incorporation documents
• Land acquisition
• Personality shopping, employment and staffing

Additional Responsibilities of a Promoter

1. Deciding on the most suitable type of company to be formed.
2. Designating the directors of the company.
3. Engaging the services of relevant professionals (solicitors, accountants).
4. Taking care of all logistics (e.g. purchase of office equipment).
5. Advertising.