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 Contract Act 1872 of
Pakistan, deals with liability of promoters for pre-incorporation contracts in
section 196 of contract of agency, where we create that if the a person do act
on behalf of principal without power and he must approve his act from principal
but if the principal cannot confirm the act of that representative then agent
must be responsible for his act. The same condition we face in
pre-incorporation stage of a company where a promoter acts on behalf of a newly
born company which cannot come into survival and promoter sanction his
act/contract from the company after its incorporation but he fails to authorize
then he is personally liable for his act/contracts. According to Companies
Ordinance 1984 of Pakistan, a promoter is responsible for pre-incorporation
contracts and if he had write any wrong declaration in list or not to disclose
any information then promote is criminally liable for this act. In Pakistan,
Company Ordinance 1984, same deals as English Company Act 2011 and declared
promoter personally liable for the pre-incorporation contracts, if the company
cannot sanction them. Because the logic is that a person cannot become a
mediator of that artificial principal which cannot come in existence.
As per Companies Ordinance 1984 of Pakistan, a promoter is obligated for
pre-joining contracts and in the event that he had compose any wrong
explanation in outline or not to reveal any data to welcome people groups for
membership then promoter is criminally at risk for this demonstration. Area 59
and 60 of Companies Ordinance 1984, clarifies the common and criminal risk of

In Companies Ordinance 1984, Section 59 (6) promoter” suggests that a promoter UN agency was a
celebration to the preparation of prospectus or a little there from containing
the untrue statement, however doesn’t embody any individual by reason of his
acting in a very skilled capability for persons engaged in procuring the
formation of the corporate.

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In Companies Ordinance 1984, Section (60)
 Discuss concerning the criminal liability for
mis-statement in prospectus, that mean Associate in Nursing untrue statement by
one and all un agency signed or approved to sign the prospectus shall be
punishable for  imprisonment or fine or
with each.

 The present position of law is that
revelation must be made to the pre-consolidation organization exist in Pakistan
either by making it to a completely free board or to the current and
conceivable working individuals all in all. In the event that the primary
strategy is dynamic the promoter will be under no further risk to the
organization. The strategy is acknowledged in which the blind of
pre-consolidation is essentially disregarded and revelation must be made in the
outline, articles, or something else, with the goal that the individuals who
are or progressed toward becoming partners, because of the business in which
the promoter was going about all things considered, satisfy data worried about
it. A halfway or inadequate revelation won’t do; the report must be
self-evident. A promoter can’t effectively contract out of his obligations by
embeddings an article by the organization and their promoter’s needs to concur
them and they can likewise overlook their real benefits.

As we all know the promoters area unit the most
persons that done the pre-incorporation activities of a firm associated supply
of prospectus is additionally an activity of pre-incorporation of company.





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