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 Virginia Preincorporation Agreement between Incorporates and Promoters is a legally binding document that outlines the terms and conditions agreed upon by the individuals involved in the formation of a corporation in the state of Virginia. This agreement serves as a foundation for the future corporation and helps to establish the roles, responsibilities, and rights of the incorporates and promoters. It provides clarity and prevents disputes that may arise during the incorporation process. In Virginia, there are three common types of Preincorporation Agreements between Incorporates and Promoters, each tailored to meet specific requirements and circumstances. These include: 1. General Preincorporation Agreement: This type of agreement is the most common and provides a comprehensive outline of the obligations and responsibilities of the incorporates and promoters. It covers the allocation of shares, management roles, decision-making processes, financing arrangements, and any other relevant provisions necessary for the successful incorporation of the company. 2. Equity-Based Preincorporation Agreement: This agreement is specifically designed for situations where the incorporates and promoters wish to allocate shares among themselves based on their respective contributions to the company. It outlines the equity distribution, including the number of shares each individual will receive, the valuation of the shares, and any subsequent capital contributions. 3. Funding Preincorporation Agreement: This type of agreement focuses primarily on fundraising activities before the official incorporation of the company. It defines the roles and responsibilities of the promoters in securing initial capital and outlines the terms and conditions of investment, including the rights, preferences, and restrictions of potential investors. Regardless of the type, a Virginia Preincorporation Agreement typically includes key provisions such as: — Purpose and scope of thagreementen— - Identification of the incorporates and promoters — Ownership structure and equity allocation — Management and decision-making authority — Confidentiality and non-competition clauses — Intellectual property rights and ownership — Indemnification and liability limitation — Dispute resolution mechanism— - Governing law and jurisdiction It is important for the incorporates and promoters to consult with legal professionals to draft a comprehensive and tailored Preincorporation Agreement that adheres to Virginia state laws and meets their specific needs. This agreement serves as a crucial document in laying the foundation for a successful corporation in Virginia.A Virginia Preincorporation Agreement between Incorporates and Promoters is a legally binding document that outlines the terms and conditions agreed upon by the individuals involved in the formation of a corporation in the state of Virginia. This agreement serves as a foundation for the future corporation and helps to establish the roles, responsibilities, and rights of the incorporates and promoters. It provides clarity and prevents disputes that may arise during the incorporation process. In Virginia, there are three common types of Preincorporation Agreements between Incorporates and Promoters, each tailored to meet specific requirements and circumstances. These include: 1. General Preincorporation Agreement: This type of agreement is the most common and provides a comprehensive outline of the obligations and responsibilities of the incorporates and promoters. It covers the allocation of shares, management roles, decision-making processes, financing arrangements, and any other relevant provisions necessary for the successful incorporation of the company. 2. Equity-Based Preincorporation Agreement: This agreement is specifically designed for situations where the incorporates and promoters wish to allocate shares among themselves based on their respective contributions to the company. It outlines the equity distribution, including the number of shares each individual will receive, the valuation of the shares, and any subsequent capital contributions. 3. Funding Preincorporation Agreement: This type of agreement focuses primarily on fundraising activities before the official incorporation of the company. It defines the roles and responsibilities of the promoters in securing initial capital and outlines the terms and conditions of investment, including the rights, preferences, and restrictions of potential investors. Regardless of the type, a Virginia Preincorporation Agreement typically includes key provisions such as: — Purpose and scope of thagreementen— - Identification of the incorporates and promoters — Ownership structure and equity allocation — Management and decision-making authority — Confidentiality and non-competition clauses — Intellectual property rights and ownership — Indemnification and liability limitation — Dispute resolution mechanism— - Governing law and jurisdiction It is important for the incorporates and promoters to consult with legal professionals to draft a comprehensive and tailored Preincorporation Agreement that adheres to Virginia state laws and meets their specific needs. This agreement serves as a crucial document in laying the foundation for a successful corporation in Virginia.
