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Corporations • Formation Requirements
CORP#001
Legal Definition
Promoters are persons acting on behalf of a corporation not yet formed.
Plain English Explanation
Before a corporation is formed, there are usually people working together to plan and prepare for its formation. For example, some folks may help find investors, or real estate, or other things that are vital to the corporation eventually existing. These folks are called promoters. Some common examples of promoters are an investment banker, an underwriter, or a stock promoter. Promoters can also be founders of a corporation who have not yet officially (or legally) formed a corporation, but have begun acting on its behalf. Basically if you see someone acting on behalf a not-yet-existing corporation, they are likely a promoter.
Hypothetical
Hypo 1: Sam wants to start a taco corporation called Yum Tacos, Inc. He has a meeting with his attorney to file the paperwork on Friday, but on Tuesday he sees the perfect commercial building for his vision. Not wanting to lose the opportunity, he meets with the landlord and signs a 1-year lease. He signs the lease, "Yum Tacos, Inc, President, Sam." Result: Yum Tacos, Inc. does not yet exist, thus Sam is acting as a promoter here. In other cards, we'll talk about what sort of liabilities Sam may be on the hook for.