5/11/2011 Company Law I Lecture 5:Promoters and Pre- incorporation contracts Promoters:scenario A rogue is thinking of some way to make some money. He decides to buy some land and sell it to a company that he will form. He buys a piece of land for $5,000,000. He then creates a new company and appoints himself and a friend as directors. He invites investors to subscribe to the company. He then sells the land to the company for $8,000,000.As director, he uses the money paid by subscribers to pay for the land. So he pockets the $3,000,000 profit,and soon after he winds up the company. Will the law permit this??5/11/2011 1 1 Company Law I Lecture 5: Promoters and Pre￾incorporation contracts 2 Promoters: scenario • A rogue is thinking of some way to make some money. • He decides to buy some land and sell it to a company that he will form. • He buys a piece of land for $5,000,000. • He then creates a new company and appoints himself and a friend as directors. • He invites investors to subscribe to the company. • He then sells the land to the company for $8,000,000. As director, he uses the money paid by subscribers to pay for the land. • So he pockets the $3,000,000 profit, and soon after he winds up the company. • Will the law permit this??