Alicia, an astute property developer, employed Adam and Robin to form a company to be called Batco Ltd and to make all the necessary arrangements regarding contracts to be entered into by Batco Ltd. Alicia herself had no active role in the incorporation of Batco Ltd; however, she became one of Batco Ltd’s three directors with Adam and Robin. Immediately after incorporation, Batco Ltd bought a commercial development site planned for a petrol station in Pitt Street, Sydney from Alicia for $900,000. The site had been purchased earlier by Alicia for $700,000 less a discount of $20,000 for allowing the vendor to remove some fixtures on the site. The actual price paid by Alicia was therefore $680,000.
Alicia, on the sale of the petrol station site to Batco Ltd, disclosed the profit of $220,000 to the board of directors. In the prospectus issued by Batco Ltd to the public, it was disclosed that the price Alicia had paid for the development site had been $700,000. No further reference was made to the property transaction. In the month prior to the sale of the property by Alicia to Batco Ltd, she was informed by the Sydney town clerk that Pitt Street was to be converted into a pedestrian mall and permanently closed to motor vehicle traffic. She was advised to immediately apply to the Sydney City Council for consent to have the property rezoned for other commercial purposes. Alicia did not do so, neither did she disclose this information to Batco Ltd.
Is Alicia a promoter ?
Refer to Corporate Law