What is one liability issue promoters should consider in their dealings with the corporation?

Promoters play a crucial role in the formation of a corporation, but they must navigate several legal and ethical obligations throughout their dealings with the entity they are creating. One significant liability issue that promoters should be aware of is their restriction on making secret profits from their dealings with the corporation.

This principle is grounded in the fiduciary duty that promoters owe to the corporation and its future shareholders. Promoters must act in the best interests of the corporation, disclosing any conflicts of interest and not engaging in self-dealing that would benefit them at the corporation's expense. If a promoter were to hide profits derived from transactions related to the corporation, they would be violating this duty, which could result in legal repercussions and obligations to compensate the corporation for any undisclosed profits.

The other options present scenarios that do not accurately capture the legal constraints on promoters. For instance, the notion that promoters cannot profit from property acquired before and after incorporation does not reflect the nuanced legal reality where they can profit, provided they disclose all relevant information. Additionally, the idea that promoters can only keep profits if the corporation is already formed simplifies the situation, as promoters can generally engage in pre-incorporation activities that yield profits, again with the requisite disclosures. Finally, the assertion regarding the