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 Vermont Preincorporation Agreement between Incorporates and Promoters is a legally binding document that outlines the responsibilities, rights, and obligations of both the incorporates and promoters in the process of forming a corporation in the state of Vermont. It serves as a preliminary agreement before the official incorporation documents are filed. The agreement typically includes the following key provisions: 1. Identification of Parties: The agreement begins by clearly identifying the incorporates and promoters involved in the formation of the corporation. Their names, addresses, and roles are specified. 2. Purpose of Agreement: The purpose clause outlines the intention of the agreement, stating that it is entered into for the purpose of forming a corporation under the laws of Vermont. 3. Shares and Capital Contributions: This section specifies the number of shares to be issued, the par value, and any capital contributions required from the incorporates. It also includes provisions related to the allocation of shares among the incorporates. 4. Organizational Meeting: The agreement may outline the details regarding the first organizational meeting of the incorporates, where important matters such as election of directors, appointment of officers, and adoption of bylaws are discussed. 5. Corporate Bylaws: The agreement may include a provision requiring the incorporates to prepare corporate bylaws in accordance with Vermont laws and submit them for approval during the organizational meeting. 6. Powers and Duties: This section lays out the powers and duties of both the incorporates and promoters during the preincorporation stage. It typically includes duties such as conducting necessary research, signing necessary documents, and seeking legal advice. 7. Confidentiality and Non-disclosure: To protect the confidentiality of sensitive information shared during the preincorporation phase, the agreement may include a confidentiality clause preventing the parties from disclosing any proprietary or confidential information to third parties. 8. Conditions Precedent: The agreement may include conditions that need to be fulfilled before the corporation can be officially incorporated, such as obtaining necessary permits or licenses, securing sufficient funding, or completing any required filings. Different types of Vermont Preincorporation Agreements between Incorporates and Promoters may exist based on the specific needs and circumstances of the parties involved. However, these variations are typically customized to meet the unique requirements of the business and are not explicitly categorized under distinct types.
