The Duties of a Promoter

There are many actions that have to be undertaken prior to a corporation coming to life. One of the most important aspects of preincorporation is the role of promoters. Promoters are individuals who take the initiative in founding and organizing the business or enterprise. They are needed to raise capital, enter contracts, and ensure an overall smooth and efficient founding of a corporation. The promoter, however, has duties beyond simply raising capital that they must live up to.

Promoters owe fiduciary duties to others within the future corporation. Owing fiduciary duties means that promoters have legal duties to act solely in another party’s interests. Promoters owe a duty of good faith to the other participants in the business venture. This includes a high standard of honesty and frankness. This is to ensure that the corporation’s interests are served before the promoter’s own interests.

Another major subset of fiduciary duties that promoters owe the corporation is a dedication to corporate funds for the corporate purpose. In essence, the promoter cannot keep corporate funds for himself aside from an appropriate pay for his time. The promoter must not allow any corporate funds under his control to go to waste, and ensure that the corporation’s interests are best served at each step of the way.

Promoters play a big role in the incorporation process, and as such are governed by their own rules. However, because promoters are given wide latitude and discretion in executing their duties to the corporation, they also have certain duties they must live up to. They cannot take advantage of their special position as promoter to the detriment of the corporation. If you feel as though your company has been taken advantage of by promoters due to their special position, consulting the right legal team can help recoup what is rightfully owed to you. Call the Trembly Law Firm at (305) 431-5678 today to schedule your consultation.