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.
Delaware Preincorporation Agreement between Incorporates and Promoters is a legally binding document that outlines the specific arrangements and agreements made between the incorporates and promoters of a Delaware corporation before its formal incorporation. This agreement serves as a blueprint for how the company will be established and operated, ensuring a smooth and efficient transition from the preincorporation stage to the corporation's formation. Key terms that are often included in Delaware Preincorporation Agreements between Incorporates and Promoters are: 1. Purpose: This section details the objectives and goals of the corporation, including its intended business activities, scope, and industry focus. 2. Promoters' Obligations: Here, the agreement defines the responsibilities and duties of the promoters, who are individuals or entities involved in setting up and organizing the corporation. This typically includes contributions of capital, assets, or intellectual property rights, as well as any agreed-upon services to be rendered. 3. Incorporates' Obligations: Similar to the promoters' obligations, this section outlines the responsibilities of the incorporates, who are the individuals actually filing the necessary documents with the Delaware Secretary of State to establish the corporation. These obligations might involve obtaining necessary licenses, certifications, or permits, as well as ensuring compliance with all applicable laws and regulations. 4. Ownership Structure: The agreement specifies the initial ownership structure of the corporation, including the number of authorized shares, their types (common, preferred, etc.), and the percentage of ownership allocated to each promoter or incorporated. 5. Capital Contributions: This section details the monetary or non-monetary contributions that each party will make to the company, such as cash, property, or services. It also addresses the conditions and timelines for such contributions. 6. Vesting and Stock Option Plans: In some cases, Delaware Preincorporation Agreements include provisions related to vesting schedules and stock option plans for founders or key employees. These provisions outline how equity ownership will be granted over time or through performance-based criteria. 7. Confidentiality and Non-Compete Clauses: To protect the corporation's trade secrets, intellectual property, and overall competitive advantage, agreements often include provisions related to confidentiality and non-compete obligations. These clauses restrict promoters and incorporates from sharing proprietary information and engaging in competing activities during and after their involvement with the corporation. Different types or variations of Delaware Preincorporation Agreements between Incorporates and Promoters may exist depending on the specifics of each corporation's circumstances. They can range from straightforward agreements with basic terms to more complex ones that include provisions related to intellectual property assignment, dispute resolution, management structure, or limitations on transferability of shares. Overall, Delaware Preincorporation Agreements between Incorporates and Promoters are crucial contracts that lay the foundation for a successful and legally compliant corporation. These agreements provide clarity and protection for all parties involved, ensuring a smooth transition from the preincorporation stage to the corporation's formal existence.Delaware Preincorporation Agreement between Incorporates and Promoters is a legally binding document that outlines the specific arrangements and agreements made between the incorporates and promoters of a Delaware corporation before its formal incorporation. This agreement serves as a blueprint for how the company will be established and operated, ensuring a smooth and efficient transition from the preincorporation stage to the corporation's formation. Key terms that are often included in Delaware Preincorporation Agreements between Incorporates and Promoters are: 1. Purpose: This section details the objectives and goals of the corporation, including its intended business activities, scope, and industry focus. 2. Promoters' Obligations: Here, the agreement defines the responsibilities and duties of the promoters, who are individuals or entities involved in setting up and organizing the corporation. This typically includes contributions of capital, assets, or intellectual property rights, as well as any agreed-upon services to be rendered. 3. Incorporates' Obligations: Similar to the promoters' obligations, this section outlines the responsibilities of the incorporates, who are the individuals actually filing the necessary documents with the Delaware Secretary of State to establish the corporation. These obligations might involve obtaining necessary licenses, certifications, or permits, as well as ensuring compliance with all applicable laws and regulations. 4. Ownership Structure: The agreement specifies the initial ownership structure of the corporation, including the number of authorized shares, their types (common, preferred, etc.), and the percentage of ownership allocated to each promoter or incorporated. 5. Capital Contributions: This section details the monetary or non-monetary contributions that each party will make to the company, such as cash, property, or services. It also addresses the conditions and timelines for such contributions. 6. Vesting and Stock Option Plans: In some cases, Delaware Preincorporation Agreements include provisions related to vesting schedules and stock option plans for founders or key employees. These provisions outline how equity ownership will be granted over time or through performance-based criteria. 7. Confidentiality and Non-Compete Clauses: To protect the corporation's trade secrets, intellectual property, and overall competitive advantage, agreements often include provisions related to confidentiality and non-compete obligations. These clauses restrict promoters and incorporates from sharing proprietary information and engaging in competing activities during and after their involvement with the corporation. Different types or variations of Delaware Preincorporation Agreements between Incorporates and Promoters may exist depending on the specifics of each corporation's circumstances. They can range from straightforward agreements with basic terms to more complex ones that include provisions related to intellectual property assignment, dispute resolution, management structure, or limitations on transferability of shares. Overall, Delaware Preincorporation Agreements between Incorporates and Promoters are crucial contracts that lay the foundation for a successful and legally compliant corporation. These agreements provide clarity and protection for all parties involved, ensuring a smooth transition from the preincorporation stage to the corporation's formal existence.
