Section 10 - Duties of promoters

(1) A person who is or has been engaged or interested in the formation of a company is a promoter of that company.

(2) A person acting in a professional capacity for persons engaged in procuring the formation of a company is not a promoter of that company.

(3) The promoter shall, until the formation of a company is complete and the working capital of the company has been raised,

(a) stand in a fiduciary relationship to the company;

(b) observe utmost good faith towards the company in a transaction with the company or on behalf of the company; and

(c) compensate the company for any loss suffered by the company by reason of the failure of the promoter to observe utmost good faith.

(4) A promoter that acquires property or information in circumstances in which it was the duty of the promoter as a fiduciary to acquire the property or information on behalf of the company, shall account to the company for the property or information and for the profit which the promoter may have made from the use of that property or information.

(5) A transaction between a promoter and the company may be rescinded by the company unless, after full disclosure of the material facts known to the promoter, the transaction has been entered into or ratified on behalf of the company,

(a) by the board of directors of the company, if all the directors of the company are independent of the promoter;

(b) by all the members of the company; or

(c) by the company at a general meeting at which neither the promoter nor the holders of the shares in which the promoter is beneficially interested have voted on the resolution to enter into or ratify that transaction.

(6) A period of limitation shall not apply to proceedings brought by a company to enforce a right under this section.

(7) In proceedings under subsection (6), the Court may relieve a promoter in whole or in part and on the terms that the Court considers fit from liability if in the circumstances, including lapse of time, the Court considers it equitable so to do.