Promoter Definition and Legal Meaning

On this page, you'll find the legal definition and meaning of Promoter, written in plain English, along with examples of how it is used.

What is Promoter?

n.a person who initiates a business undertaking or corporation and is responsible to raise capital or funds for the new undertaking.He is either the major stock holder or the person responsible for management of the undertaking and receives stock for his efforts called “promational stock” which is limited as it is supported by effort and not cash or assets.

History and Meaning of Promoter

A Promoter is a person who is responsible for initiating the business undertaking or corporation and is accountable for raising capital or funds for the new entity. Promoters can be individuals, groups of persons or companies who have an idea for a new business and create an organization to carry out that idea.

The role of a promoter can vary, but some of their responsibilities may include identifying business opportunities or an untapped market, developing a business plan, and securing funding by seeking investors. They also oversee the management of the company, including hiring employees and ensuring that the business is compliant with applicable laws and regulations.

Promoters typically receive stock in the newly-formed company for their efforts, which is known as “promotional stock”. This stock is considered limited as it is supported by effort and not cash or assets.

Examples of Promoter

  1. John has a great idea for a new social media platform, but he needs financial backing to get it off the ground. He becomes the promoter of the new company and seeks out investors to provide funding.

  2. Mary is a successful businesswoman who identifies an untapped market for a new line of cosmetics. She becomes the promoter of the new company that will produce and sell these cosmetics, securing investors to finance the venture.

  3. A group of friends who are passionate about sustainable living decide to form a new company that produces and sells eco-friendly products. They appoint one member as the promoter, who takes the lead in securing funding and setting up the new business.

Legal Terms Similar to Promoter

  1. Founder - A founder is similar to a promoter in that they create and launch a new business venture. However, a founder typically has a more active role in the management of the business than a promoter.

  2. Entrepreneur - An entrepreneur is a person who starts and runs a business venture. While not exactly the same as a promoter, entrepreneurs often take on the role of promoter when securing funding for their new business.

  3. Venture Capitalist - A venture capitalist is someone who provides financial backing for a new business in exchange for an ownership stake. While not a promoter themselves, venture capitalists often work closely with promoters and founders to secure funding and launch a new venture.