Pre-incorporation Agreements

Agreements prior to the formation of forming a legal entity such as a Corporation or Limited Liability Company include various contracts entered into by incorporators, promoters, subscribers, and eventual corporate principals regarding the future organization of a corporation. These pre-formation agreements establish the ground rules for the organization, capitalization, and management of the proposed corporation or other legal entity. Also, the parties may wish to enter into employment agreements which will become effective on completion of the formation and organization of the new corporation.

Pre-incorporation Agreements

An agreement to incorporate or form a limited liability company may be used by the parties to establish the general terms and conditions associated with the formation and initial organization of a new corporation. The content of the agreement will vary depending upon the circumstances.

Requirements and Considerations:

  1. Names and addresses of the parties;

  2. The proposed name of the corporation and a description of the procedures that will be followed to check the availability of the name and reserve it for future use on behalf of the corporation;

  3. A description of the proposed purpose and activities of the corporation;

  4. A summary of the place or places where it is anticipated that the corporation will conduct its business, including a statement of the procedures that will be followed in order to qualify the corporation as a foreign corporation;

  5. A description of the proposed capitalization of the corporation, including subscriptions by the parties;

  6. A list of the incorporators, initial directors and officers of the corporation;

  7. A description of the terms of engagement of any persons required to assist in the incorporation process, such as lawyer, accountants or appraisers.

Other Considerations:

  1. A description of the terms of any proposed employment relationship between the new corporation and any of its organizers and/or promoters;

  2. The general terms of any buy-sell arrangements among the corporation and its future shareholders;

  3. If the principals wish to have the corporation treated as a Subchapter S corporation for tax purposes, the agreement may contain various covenants regarding the steps that will be taken to perfect and maintain Subchapter S status;

  4. A description of any proposed purchase of assets by the new corporation, which will be relevant whenever the new corporation is going to take over the operations of a going concern;

  5. When subscriptions will be sought from persons not otherwise affiliated with the founding group, a description of the procedures that will be followed in making the offering, including the preparation of an offering document, engagement of investment bankers and payment of the fees and expenses associated with complying with any securities law requirements;

  6. If an existing business will be incorporated, a description of the assets that will be transferred to the new corporation, the shares that will be issued in exchange for each proprietor's interest and a summary of the tax elections that will be made in connection with the incorporation.

AGREEMENTS, DOCUMENTS & FORMS:

General Pre-incorporation Agreement
Promoters' Agreement
Agreement to Incorporate Partnership
Agreement to Form Close Corporation
Proposal for Formation of a Corporation