A promoter is a person who starts up a business, particularly a corporation, including the financing. The formation of a corporation starts with an idea. Preincorporation activities transform this idea into an actual corporation. The individual who carries on these preincorporation activities is called a promoter. Usually the promoter is the main shareholder or one of the management team and receives stock for his/her efforts in organization. Most states limit the amount of "promotional stock" since it is supported only by effort and not by assets or cash. If preincorporation contracts are executed by the promoter in his/her own name and there is no further action, the promoter is personally liable on them, and the corporation is not.
Under the Federal Securities Act of 1933, a pre-organization certificate or subscription is included in the definition of a security. Therefore, a contract to issue securities in the future is itself a contract for the sale of securities. In order to secure an exemption, all stock subscription agreements involving intrastate offerings should contain representations by the purchasers that they are bona fide residents of the state of which the issuer is a resident and that they are purchasing the securities for their own account and not with the view to reselling them to nonresidents. A stock transfer restriction running for a period of at least one year or for nine months after the last sale of the issue by the issuer is customarily included to insure that securities have not only been initially sold to residents, but have "come to rest" in the hands of residents.
A California Preincorporation Agreement between Incorporates and Promoters is an essential legal document that outlines the terms and conditions agreed upon by individuals involved in the formation of a corporation in the state of California. This agreement serves as a preliminary contract before the corporation is officially incorporated and establishes the framework for its formation. The California Preincorporation Agreement is typically entered into by both the incorporates and the promoters who facilitate the corporation's creation. The incorporates are individuals responsible for preparing the necessary paperwork and filing it with the state to establish the corporation, while the promoters are those who initiate and organize the business concept that leads to its formation. This agreement defines the roles, responsibilities, and obligations of both parties during the preincorporation phase. Essential elements covered in the agreement may include the following: 1. Purpose: Clearly defines the objective and purpose of the corporation that the parties intend to establish. 2. Incorporated's Duties: Outlines the specific duties and responsibilities of the incorporates, such as filing the necessary documents with the Secretary of State, obtaining required licenses, permits, and complying with legal requirements, among others. 3. Promoter's Obligations: Specifies the promoter's obligations related to developing the business concept, securing initial funding, conducting market research, creating business plans, and other activities necessary for the corporation's formation. 4. Capitalization: Describes the initial capital contributions or investments required from the promoters or other parties. This includes stipulations related to the issuance and allocation of shares to the incorporates or promoters. 5. Ownership and Equity: Defines the ownership structure and distribution of equity among the incorporates, promoters, and any other involved parties. This may include provisions related to the allocation of shares, voting rights, and the distribution of profits or losses. 6. Confidentiality: Includes clauses ensuring the confidentiality of any sensitive information shared between the parties during the preincorporation period, protecting trade secrets, proprietary information, and any intellectual property rights associated with the corporation. 7. Termination: Outlines the circumstances under which the agreement may be terminated, including breaches, default, or completion of the incorporation process. It may also include provisions for dispute resolution mechanisms, such as arbitration or mediation. Different types or variations of the California Preincorporation Agreement between Incorporates and Promoters may exist, depending on the specific needs and requirements of the parties involved. These agreements can be customized and tailored to suit the unique circumstances of the formation of the corporation. The parties involved may choose to consult legal professionals to assist in drafting an agreement that best reflects their intentions and protects their interests.A California Preincorporation Agreement between Incorporates and Promoters is an essential legal document that outlines the terms and conditions agreed upon by individuals involved in the formation of a corporation in the state of California. This agreement serves as a preliminary contract before the corporation is officially incorporated and establishes the framework for its formation. The California Preincorporation Agreement is typically entered into by both the incorporates and the promoters who facilitate the corporation's creation. The incorporates are individuals responsible for preparing the necessary paperwork and filing it with the state to establish the corporation, while the promoters are those who initiate and organize the business concept that leads to its formation. This agreement defines the roles, responsibilities, and obligations of both parties during the preincorporation phase. Essential elements covered in the agreement may include the following: 1. Purpose: Clearly defines the objective and purpose of the corporation that the parties intend to establish. 2. Incorporated's Duties: Outlines the specific duties and responsibilities of the incorporates, such as filing the necessary documents with the Secretary of State, obtaining required licenses, permits, and complying with legal requirements, among others. 3. Promoter's Obligations: Specifies the promoter's obligations related to developing the business concept, securing initial funding, conducting market research, creating business plans, and other activities necessary for the corporation's formation. 4. Capitalization: Describes the initial capital contributions or investments required from the promoters or other parties. This includes stipulations related to the issuance and allocation of shares to the incorporates or promoters. 5. Ownership and Equity: Defines the ownership structure and distribution of equity among the incorporates, promoters, and any other involved parties. This may include provisions related to the allocation of shares, voting rights, and the distribution of profits or losses. 6. Confidentiality: Includes clauses ensuring the confidentiality of any sensitive information shared between the parties during the preincorporation period, protecting trade secrets, proprietary information, and any intellectual property rights associated with the corporation. 7. Termination: Outlines the circumstances under which the agreement may be terminated, including breaches, default, or completion of the incorporation process. It may also include provisions for dispute resolution mechanisms, such as arbitration or mediation. Different types or variations of the California Preincorporation Agreement between Incorporates and Promoters may exist, depending on the specific needs and requirements of the parties involved. These agreements can be customized and tailored to suit the unique circumstances of the formation of the corporation. The parties involved may choose to consult legal professionals to assist in drafting an agreement that best reflects their intentions and protects their interests.
