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.
The District of Columbia Preincorporation Agreement between Incorporates and Promoters is a legal document that outlines the terms and conditions agreed upon by the incorporates and promoters involved in the formation of a business entity in the District of Columbia. This agreement serves as a foundation for the incorporation process and helps in clarifying the roles and responsibilities of each party, ensuring a smooth transition into a legally recognized entity. Key provisions typically included in a District of Columbia Preincorporation Agreement between Incorporates and Promoters are: 1. Identification of Parties: The agreement begins by identifying the parties involved, including the names and addresses of the incorporates and promoters. 2. Purpose of Agreement: This section explains the purpose of the agreement, which is to establish a framework for the future incorporation of a business entity in the District of Columbia. 3. Business Name and Structure: The agreement specifies the desired name of the business entity and its intended structure, such as a corporation, limited liability company (LLC), or partnership. 4. Capitalization and Ownership: This section outlines the initial capital contribution required from each incorporated, as well as the respective ownership percentages or shares in the future entity. 5. Roles and Responsibilities: The agreement defines the roles and responsibilities of each incorporated and promoter during the preincorporation phase. It may outline their duties related to obtaining necessary permits, licenses, and regulatory compliance, as well as the division of labor and decision-making authority. 6. Intellectual Property: If the business entity will rely on intellectual property, such as trademarks, copyrights, or patents, this section may address ownership, licensing, and usage rights related to such assets. 7. Confidentiality and Non-Disclosure: To protect the business idea and related information, the agreement may include provisions regarding confidentiality and non-disclosure, preventing the sharing of sensitive information with third parties. 8. Term and Termination: This provision specifies the duration of the preincorporation agreement, including any conditions that could lead to its termination, such as the failure to proceed with incorporation within a specified timeframe. Different types or variations of District of Columbia Preincorporation Agreement between Incorporates and Promoters may exist, depending on the nature of the business or the specific requirements of the parties involved. However, the key concepts mentioned above generally apply to any preincorporation agreement in the District of Columbia.
