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Promoter Liability - Explained

Promoters Bring the Corporation into Existence

Written by Jason Gordon

Updated at November 28th, 2020

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What is promoter liability?

A promoter of a corporation is the individual arranging contracts for or on behalf of the corporation. This includes entering into subscription agreements for the sale of securities to shareholders. The promoter is liable for these contracts until or unless the corporation ratifies and adopts the promoters activity. In such case, the corporation agrees to hold the promoter harmless for any potential liability from her actions as promoter.

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