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 Massachusetts Preincorporation Agreement between Incorporates and Promoters is a crucial legal document that outlines the initial terms and conditions agreed upon by the parties involved in the formation of a corporation in the state of Massachusetts. This agreement serves as a blueprint for the corporation's formation and sets forth the rights, obligations, and responsibilities of both the incorporates and promoters. The Massachusetts Preincorporation Agreement typically covers a comprehensive range of topics, ensuring a smooth and organized process for the incorporation. The agreement may include the following key provisions: 1. Purpose: This section defines the purpose and objectives of the corporation, clearly stating the activities it will engage in and the industries it will operate within. 2. Incorporates' Roles: The roles and responsibilities of the incorporates are specified here, outlining their duties during the formation process, such as filing necessary documents with the Massachusetts Secretary of State, preparing the Articles of Organization, and obtaining any required licenses or permits. 3. Capitalization: This section addresses the initial capital required for the corporation, including the amount and types of shares to be issued, and any restrictions on their transferability. 4. Ownership: The agreement may detail the distribution of shares among the incorporates, outlining each individual's ownership percentage and any specific rights attached to their shares. 5. Management: The agreement may outline the structure of the corporation's management, such as the board of directors or managerial roles, and the process of electing or appointing individuals to these positions. 6. Voting and Decision-Making: This section defines the voting and decision-making process among the incorporates, specifying the required majority for passing resolutions or making important decisions. 7. Intellectual Property: If relevant, the agreement may address the ownership and protection of intellectual property rights developed during the incorporation process or later by the corporation. 8. Confidentiality and Non-Disclosure: This provision establishes obligations of confidentiality among the incorporates, ensuring that sensitive information shared during the formation remains confidential. 9. Indemnification: The agreement may include provisions for indemnification, protecting the incorporates and promoters from liability arising out of their roles during the incorporation process. 10. Termination: This section outlines the circumstances under which the agreement can be terminated and the process to be followed in such cases. In addition to the standard Massachusetts Preincorporation Agreement, different variations may exist depending on the specific needs and requirements of the parties involved. For instance, there may be separate agreements for promoting and investing in the corporation, detailing the financial terms, responsibilities, and expectations of each party. Keywords: Massachusetts, Preincorporation Agreement, incorporates, promoters, formation, corporation, legal document, terms and conditions, blueprint, rights, obligations, responsibilities, purpose, capitalization, ownership, management, voting, decision-making, intellectual property, confidentiality, non-disclosure, indemnification, termination, promoting, investing.A Massachusetts Preincorporation Agreement between Incorporates and Promoters is a crucial legal document that outlines the initial terms and conditions agreed upon by the parties involved in the formation of a corporation in the state of Massachusetts. This agreement serves as a blueprint for the corporation's formation and sets forth the rights, obligations, and responsibilities of both the incorporates and promoters. The Massachusetts Preincorporation Agreement typically covers a comprehensive range of topics, ensuring a smooth and organized process for the incorporation. The agreement may include the following key provisions: 1. Purpose: This section defines the purpose and objectives of the corporation, clearly stating the activities it will engage in and the industries it will operate within. 2. Incorporates' Roles: The roles and responsibilities of the incorporates are specified here, outlining their duties during the formation process, such as filing necessary documents with the Massachusetts Secretary of State, preparing the Articles of Organization, and obtaining any required licenses or permits. 3. Capitalization: This section addresses the initial capital required for the corporation, including the amount and types of shares to be issued, and any restrictions on their transferability. 4. Ownership: The agreement may detail the distribution of shares among the incorporates, outlining each individual's ownership percentage and any specific rights attached to their shares. 5. Management: The agreement may outline the structure of the corporation's management, such as the board of directors or managerial roles, and the process of electing or appointing individuals to these positions. 6. Voting and Decision-Making: This section defines the voting and decision-making process among the incorporates, specifying the required majority for passing resolutions or making important decisions. 7. Intellectual Property: If relevant, the agreement may address the ownership and protection of intellectual property rights developed during the incorporation process or later by the corporation. 8. Confidentiality and Non-Disclosure: This provision establishes obligations of confidentiality among the incorporates, ensuring that sensitive information shared during the formation remains confidential. 9. Indemnification: The agreement may include provisions for indemnification, protecting the incorporates and promoters from liability arising out of their roles during the incorporation process. 10. Termination: This section outlines the circumstances under which the agreement can be terminated and the process to be followed in such cases. In addition to the standard Massachusetts Preincorporation Agreement, different variations may exist depending on the specific needs and requirements of the parties involved. For instance, there may be separate agreements for promoting and investing in the corporation, detailing the financial terms, responsibilities, and expectations of each party. Keywords: Massachusetts, Preincorporation Agreement, incorporates, promoters, formation, corporation, legal document, terms and conditions, blueprint, rights, obligations, responsibilities, purpose, capitalization, ownership, management, voting, decision-making, intellectual property, confidentiality, non-disclosure, indemnification, termination, promoting, investing.
