Explain the remedies available against promoters for breach of duty.

• Rescission of contract: a company may rescind a contract entered into by a promoter on its “behalf” before incorporation. This remedy restores the parties to the position they were before the contract. However, the remedy may be lost in various circumstances e.g. delay or affirmation.

• Recovery of profit or account: a company is generally entitled to any secret profit made by a promoter in breach of his fiduciary duties. The amount is recoverable under an action for money had and received.
• Damages: a company has an action in damages against a promoter for breach of his fiduciary duties. This action is sustainable even in the absence of fraud.
• Compensation: a promoter is liable to compensate any person who has suffered loss or damage by reason on subscribing for company‟s securities on the faith of a prospectus containing any untrue statement.
• Public examination: under the provisions of the companies Act the High Court of law has jurisdiction to subject a promoter to a public examination over his conduct during the incorporation of the company.

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