Promotional stock
Definition
Stock issued to a promoter by a newly formed corporation as payment for the promoter's efforts in promoting the corporation, which may involve finding funding and new stockholders, entering into contracts or actually filing the charter on behalf of the corporation. Most states limit the amount of promotional stock that can be paid in exchange for the promoter's efforts, due to it not being issued in exchange for money or assets.
See also
Definition from Nolo’s Plain-English Law Dictionary
Shares issued by a newly formed corporation to a promoter (organizer) of the corporation in payment for putting the company together and locating shareholders or other funding. Some states limit the amount of promotional stock the promoter can receive to an amount reasonable for the effort, since it is supported by labor alone and not by assets or cash.
Definition provided by Nolo’s Plain-English Law Dictionary.
August 19, 2010, 5:22 pm
