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 Maryland Preincorporation Agreement between Incorporates and Promoters is a legal document that outlines the terms and conditions agreed upon by the individuals seeking to form a corporation in the state of Maryland. This agreement serves as a roadmap guiding the actions and responsibilities of both the incorporates and promoters during the early stages of the incorporation process. This legal document is designed to ensure a clear understanding between the parties involved, preventing potential conflicts and disputes that may arise during the preincorporation phase. Some key elements typically included in the Maryland Preincorporation Agreement between Incorporates and Promoters may include: 1. Identification of Parties: The agreement should clearly identify the incorporates and promoters involved in the formation of the corporation. This includes their names, addresses, and contact information. 2. Purpose of the Corporation: The agreement outlines the objectives and purpose of the corporation being formed. This section should provide a detailed description of the intended business activities and goals. 3. Capital Contributions: It specifies the amount and nature of the initial capital contributions from each incorporated. This may include cash, property, or services rendered. 4. Distribution of Shares: The agreement determines the number of shares of stock to be issued and outlines how they will be distributed among the incorporates and promoters. It may also include provisions for the issuance of additional shares in the future. 5. Roles and Responsibilities: This section defines the roles and responsibilities of the incorporates and promoters during the preincorporation phase. It clarifies who will handle tasks such as drafting the articles of incorporation, securing necessary licenses, and opening bank accounts. 6. Confidentiality and Non-Disclosure: The agreement may include provisions regarding the confidential nature of the information shared between the parties. It ensures that sensitive business information is not disclosed to unauthorized individuals or entities. 7. Termination of Agreement: This section outlines the circumstances under which the agreement can be terminated or modified. It may also include provisions for dispute resolution, such as mediation or arbitration. While there may not be different types of Maryland Preincorporation Agreements between Incorporates and Promoters, the specific terms and conditions can vary based on the unique requirements and preferences of the parties involved. It is essential to consult with a legal professional familiar with Maryland corporate law to ensure compliance and accuracy when drafting or reviewing such an agreement.
