Promoter Of A Company: The Person Behind The Processes


A company isn’t just founded by a person, it’s the cumulative efforts of a team that builds the empire. it’s their idea and struggle that results in the profitable success of the business and also the rise of the corporate. Individuals that labor diligently and persistently to bring ideas to life are known as promoters. The promoter of a corporation isn’t a term included within the law but is a vital part of the business. 

  1. Who is the promoter of an organization in India?
  2. Types of promoters of a corporation
  3. Liabilities of a promoter
  4. Steps involved during the promotion of an organization
  5. Rights of promoters
  6. Conclusion

Who is the promoter of an organization in India?

The promoter of an organization may be a personal, partner, syndicate, and not necessarily the owner. a number of them may have legal relations with the corporate, while some might not. The Indian Companies Act, 2013 defines the concept of a promoter in company law but doesn’t assign any specific legal position to them. The promoter of a corporation is in association with the corporate from the ideation process to its incorporation. Moreover, the promoter of an organization in India renders the supervision to hold out judicial decisions and sign the agreements still. 

Types of promoters of an organization

The promoter of a corporation in India includes the subsequent type:

Professional promoters:

They play a big role to ascertain the corporate, and once all the procedures are complete, they get in the corporate to the shareholders. Although there don’t seem to be plenty of professional promoters of an organization in India, it’s quite common in countries just like the UK, Germany, etc. 

Occasional promoters:

 they are doing not stay or add the corporate regularly. They bounce about from company to company, doing promotional work on the side.samples of such promoters in company law include engineers, architects, lawyers, etc. 

Financial promoters:

Some financial companies may take up the work of economic promotion of a corporation betting on the truth of the market. 

Liabilities of a promoter

The liabilities of a promoter of a corporation in India include:

  • The rules don’t allow them to create secret profits in any form. Out-of-company deals, or profits for private promotion.
  • The deposition of all the amounts received on behalf of the corporate should be worn out of the corporate account.
  • The promoter has to take proper care while performing their tasks.
  • The promoters are fully responsible for any contracts signed or pending until they are approved.
  • For any investments, the promoter needs to make the compensation just in case of any issues or untrue statements.

Steps involved during the promotion of an organization

There are several steps involved during the promotion of an organization which include:


the primary and most vital step is to possess a concept and the way to execute it. One must know what the business is about and appearance for opportunities within the field.


The promoters create a correct well-planned structure of company management and execution. An expert opinion together with the cost structure is sought and analyzed.

Name approval and registration: 

Once completed, the promoters are liable for the appliance and registration of the corporate name with the Registration of Companies.


After this, the promoters take the appointments from all the professionals to hold out various tasks and contracts.


The promoter in company law must essentially keep all the legal and official safe for incorporation and further activities. 

Rights of promoters

Being a component of the corporate and its incorporation, the rights of promoters include the following:

Right of indemnity: 

within the case of partnership or involvement of over one promoter in an exceeding company, one promoter can deem the opposite for any untrue statements or secret profits. 

Right of preliminary expenses: 

The promoter has the proper to receive the legitimate expenses for being an element of the corporate. Although it’s not mandatory among the rights of promoters. It depends on the individual or the group to say it. 

Right of remuneration: 

Additionally, the promoters usually receive their remuneration reckoning on the services or as per the need of the director. However, the promoter cannot sue the corporate until they need a legal contract for the identical. they supply the remuneration in several ways, including:

  • Commission
  • Grant amount
  • Shares
  • Subscription of shares
  • Buying part of the company’s property

Apart from the rights of promoters, they need several other duties and liabilities they need to stick to.


The promoters surely play a vital role within the company’s establishment and its success. Whether or not it’s handling the professionals or employing the workers, the promoters help within the very best ways to line up the corporate.