There is a "quiet period" between the time that a company files a registration statement with the Securities and Exchange Commission for a new public securities offering and the time that the Commission declares the registration statement effective. During the quiet period, referred to as the "waiting period" also, the company and related parties are prohibited by federal securities laws from releasing information to the public that could be construed as promoting sale of the securities covered by the as yet unapproved registration statement.
Continuity of existence is an important factor in choosing the structure of a business. The value of a business when viewed as a continuing or "going" concern is likely to be considered higher than the same business if it is being dissolved and its value is being distributed.
(The Private Offering Exemption From SEC Registration Requirements)
Persons who enter into contracts on behalf of a corporation yet to be formed are considered "promoters." Such pre-incorporation contracts raise issues regarding the rights and liabilities of the promoter and the new corporation.
Business Organizations
