Fiduciary relation of promoters meaning

The fiduciary relation of promoters describes the equitable duties owed by anyone who undertakes to form, float or raise capital for a company to that company, from the first step taken to promote it until they cease promoting or an independent, fully informed board or shareholders assumes control. It is primarily a case-law concept across England and Wales, Scotland, Northern Ireland and Ireland; legislation addresses related topics (such as pre-incorporation contracts and prospectus obligations) but does not displace these fiduciary obligations. - Duty of loyalty and good faith to the company being formed. - No secret profits; avoid conflicts of interest and self-dealing without full disclosure. - Full disclosure of any interest in transactions to an independent board or all shareholders; obtain genuinely independent approval. - Account to the company for gains made and for any misuse of its property or opportunities. - Transactions where promoters sell their own assets to the company must be fair and transparently disclosed. Breach may lead to rescission, an account of profits and other equitable remedies. Ratification is possible only by fully informed, independent shareholders or directors. Usage and effect are broadly consistent across the UK and Ireland, though statutory overlays vary.