Section 50, The Companies Act, 2009

(1) A promoter stands in a fiduciary relationship to thecompany and shall observe the utmost good faith towards the company in any transaction with it or on its behalf and shall compensate the company for any loss suffered by reason of his failure to do so. (2) A promoter who acquired any property or information in circumstances in which it was his duty as a fiduciary to acquire it on behalf of the company shall account to the company for the property and for any profit which he may have made from the use of the property or information. (3) Any transaction between a promoter and the company may be rescinded by the company unless, after full disclosure of all material facts known to the promoter, the transaction shall have been entered into or ratified on behalf of the company– (a) by the company’s board of directors independent of the promoter; (b) by all the members of the company; or (c) by the company at a general meeting at which neither the promoter nor the holders of any shares in which he is beneficially interested shall vote on the resolution to enter into or ratify that transaction. (4) No period of limitation shall apply to any proceedings brought by the company to enforce any of its rights under this section but in such proceedings the court may relieve a promoter in whole or in part and on such terms as it thinks fit from liability if in all the circumstances, including lapse of time, the court thinks it equitable to do so. PART IV–ACTS BY OR ON BEHALF OF THE COMPANY