Promotion refers to the stage in the formation of a company where a person or group of persons discovers a business opportunity, analyses its prospects, and takes necessary steps to bring the company into existence. A promoter is one who undertakes to form a company with reference to a given project and sets it going. As per Section 69, a promoter means a person named in the prospectus or identified in the annual return, or who has control over company affairs directly or indirectly, or in accordance with whose advice the Board of Directors is accustomed to act.

Regarding the legal position of promoters, promoters enjoy a fiduciary position with the company which they must not misuse. They can make a profit only if it is disclosed but must not make any secret profits. In case of non-disclosure, the company can rescind the contract, recover the purchase price paid, and claim damages for the loss suffered.

Promoters are neither agents nor trustees of the company. They cannot be agents as the company is yet to be incorporated. Therefore, they are personally liable for all contracts entered by them for the company before its incorporation, if the same are not ratified by the company later on.

Regarding remuneration and expenses, promoters are not legally entitled to claim expenses incurred in promotion. However, the company may reimburse pre-incorporation expenses and remunerate them through lump sum payment, commission, or by allotting shares or debentures.