Promotional stock is stock issued by a newly formed company to the promoters of the company as compensation for promoting the company, such as raising capital, finding new shareholders, signing contracts or filing articles of incorporation. Federal securities and exchange regulations and most states limit the amount of promotional stock to an amount commensurate with the promoter's efforts, due to the fact that these shares are not backed by the shareholders' money or assets.
[Last updated in June of 2022 by the Wex Definitions Team]
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