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 Kentucky Preincorporation Agreement between Incorporates and Promoters is a legal document that outlines the initial agreement and understanding between individuals or entities involved in the formation of a corporation in the state of Kentucky. This agreement serves as the basis for establishing the roles, rights, and responsibilities of the incorporates and promoters before the corporation comes into existence. The terms and clauses included in the Kentucky Preincorporation Agreement between Incorporates and Promoters may vary depending on the specific needs and preferences of the parties involved. However, certain key elements are typically covered in such agreements. One important aspect addressed in the agreement is the identification of the incorporates and promoters. These individuals or entities play crucial roles in the formation of the corporation and are often listed by name, identifying their roles and responsibilities within the agreement. The agreement may also outline the proposed business or corporate objectives, including the nature of the business, its goals, and its intended market niche. This section may also touch upon any specific industries, products, or services that the corporation seeks to engage in, imparting a clear understanding of the envisaged scope of the company's activities. Furthermore, the Kentucky Preincorporation Agreement between Incorporates and Promoters often includes provisions related to the capital structure of the corporation. This may involve details about the authorized capital, proposed share structure, and any potential limitations on the transferability of shares. By specifying these aspects in advance, the agreement establishes a framework that governs future stock distribution and investment-related decisions. In addition, the agreement may cover the ownership and management structure of the corporation, detailing the roles and responsibilities of directors, officers, or other key individuals. It may also outline the procedure for appointing specific personnel and their powers and limitations within the corporation. The Kentucky Preincorporation Agreement between Incorporates and Promoters may also address any agreements or commitments related to intellectual property rights, such as trademarks, patents, or copyright ownership, if applicable to the proposed business. As for the different types of Kentucky Preincorporation Agreement between Incorporates and Promoters, variations can arise based on specific industry requirements or unique expectations of the parties involved. For example, there may be specific agreements for technology startups, healthcare companies, or real estate ventures. These specialized agreements may include clauses or provisions specific to the industry, covering areas such as regulatory compliance, licensing, or confidentiality requirements. In summary, a Kentucky Preincorporation Agreement between Incorporates and Promoters is a vital document in the process of forming a corporation. By detailing the roles, responsibilities, and intentions of the parties involved, this agreement provides a solid foundation for the future legal and operational aspects of the organization. Clarity in the agreement contributes to a smooth incorporation process and helps in avoiding potential disputes among incorporates and promoters.
