In order to obtain the benefits of a “legal personality”, it is very necessary that a “People Association” be established under the Saudi Companies Law. After the union of persons is established, the company appears, and it can start its business operations as a company only after that.
The simple reason behind this is that prior to incorporation the company had no legal existence prior to incorporation, and if the Association of Persons entered into an agreement in the name of the company prior to incorporation; The agreement will be void from the start.
It would be disturbing that the Association of Persons could not carry out any formal business operation in the name of the company prior to its incorporation or the issuance of a certificate of commencement of business; They may have to make arrangements for office, workplace, staff, etc. In order to get rid of these inconveniences, the Promoter can enter into agreements in favor of the “union of persons” or the potential company; These agreements are known as the pre-establishment contract.
Documentation of the articles of incorporation of companies Ministry of Justice
Whether the promoter is responsible for the pre-incorporation contract or not? If he is responsible, under what circumstances can he be held liable?
What if there is any difference between Saudi law, US law and English law regarding the promoter’s liability in relation to a pre-incorporation contract?
The meaning of the promoter and the nature of the pre-incorporation contract
The Corporations Act does not provide a common definition of a promoter. , but the definition in this paragraph will be limited to the area of that section. The Dissatisfied Company Bill contains the definition of the promoter. It says that “the promoter means the person who (a) is so named in the prospectus; or (b) to control the affairs of the company directly or indirectly, whether as a shareholder or director.”
But this bill is not yet in effect, so the old law would be applicable for the time being, which does not contain a promoter's common identification clause.
In conclusion, one can say that promoter impliedly refers to any individual, union, association, partnership or corporation, which takes all necessary steps for the creation, formation and operation of a corporation.