General Studies · Promoter Duties and Disclosure
James is a promoter for 'TechStream plc'. Two months before TechStream's incorporation, James purchased a warehouse in his own name for £200,000. After TechStream was incorporated, James sold the warehouse to the company for £300,000. He disclosed this profit to the board of directors, which consisted only of himself and his business partner, who was also a promoter. No disclosure was made to independent prospective shareholders. Which of the following statements is correct regarding James's £100,000 profit?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
Share:
- 1TechStream plc can only rescind the contract but cannot recover the profit as James is not a director yet.
- 2James is not liable because he owned the warehouse before he began acting as a promoter.
- 3James is liable to TechStream plc for the profit because disclosure must be made to an independent board or shareholders.✓
- 4James is entitled to keep the profit because he disclosed it to the board of directors.
Correct answer
James is liable to TechStream plc for the profit because disclosure must be made to an independent board or shareholders.
Download Single Question PDF
Save this question and verified answer as a clean study sheet with live clickable link.
👥
Share with Friends & Study Groups
Challenge your peer aspirants on WhatsApp or Telegram to solve this question!
Online Test Series
Start Free Mock Test →Preparing for General Studies?
Practice full-length mock tests with real exam timers, instant score analysis, and all-India ranking.
Chapter Practice
Practice Promoter Duties and Disclosure MCQs →Want more practice questions on Promoter Duties and Disclosure?
Solve complete topic-wise tests with detailed solutions on GkGet.
Related Practice Questions
Recommended practice questions in General Studies · Promoter Duties and Disclosure