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Corporations-Liability Of Promoters For Secret Profit
Corporations-Liability Of Promoters For Secret Profit
Michigan Law Review
In view of the peculiar position of control which a promoter occupies in relation to the proposed corporation, with resultant opportunities for making unconscionable profits, courts have uniformly regarded him as standing in a fiduciary relationship toward the corporation. Accordingly, when a promoter seeks to make a profit from a transfer of property to the corporation, he must obtain the consent of the latter under penalty of having to disgorge such profit at a later time at the suit of the corporation itself or persons acting in the latter's behalf. Such liability is to be distinguished from the liability of …