A corporation whose shares are held by a single shareholder or a closely-knit group of shareholders (such as a family) is known as a close corporation. The shares of stock are not traded publicly. Many of these types of corporations are small firms that in the past would have been operated as a sole proprietorship or partnership, but have been incorporated in order to obtain the advantages of limited liability or a tax benefit or both.
A buy-sell agreement is an agreement between the owners (shareholders) of a firm, defining their mutual obligations, privileges, protections, and rights. This form is a generic example that may be referred to when preparing such a form for your particular state. It is for illustrative purposes only. Local laws should be consulted to determine any specific requirements for such a form in a particular jurisdiction.
A California Stock Agreement, also known as a Buy Sell Agreement between Shareholders and Corporation, is a legally binding contract that protects both shareholders and the corporation in the event of specific triggering events. These agreements provide a clear and structured framework for the sale and transfer of stock interests. One type of California Stock Agreement is the Cross Purchase Agreement. This type of agreement is typically used in smaller corporations with a limited number of shareholders. In a Cross Purchase Agreement, each shareholder agrees to purchase the stock interests of the other shareholders upon the occurrence of specific events such as death, disability, retirement, or voluntary separation. Another type of California Stock Agreement is the Entity Purchase Agreement, also known as the Stock Redemption Agreement. This agreement is commonly used in larger corporations with multiple shareholders. In an Entity Purchase Agreement, the corporation itself agrees to buy back the stock interests of a shareholder upon the occurrence of the same triggering events mentioned earlier. These agreements outline the terms and conditions under which stock interests are bought and sold, including the valuation method(s), payment terms, and any restrictions or limitations on transferability. They provide a mechanism for the remaining shareholders or the corporation to buy out the departing shareholder's interests, ensuring a smooth transition and continuity of ownership. A California Stock Agreement typically includes provisions regarding the purchase price determination, whether it be through a pre-agreed formula, independent appraisal, or negotiation. The agreement also addresses the funding mechanism for the buyout, which can involve insurance policies, sinking funds, borrowing, or retained earnings. Other crucial provisions in a California Stock Agreement include right of first refusal, which allows existing shareholders or the corporation to match any bona fide offers made by third parties to purchase stock interests, as well as restrictions on transferability or encumbrances of shares. Overall, a California Stock Agreement — Buy Sell Agreement between Shareholders and Corporation is a vital tool for protecting the rights and interests of both shareholders and the corporation in the event of certain triggering events. It provides a clear roadmap for the orderly transfer and sale of shares, ensuring stability and continuity within the corporation's ownership structure.A California Stock Agreement, also known as a Buy Sell Agreement between Shareholders and Corporation, is a legally binding contract that protects both shareholders and the corporation in the event of specific triggering events. These agreements provide a clear and structured framework for the sale and transfer of stock interests. One type of California Stock Agreement is the Cross Purchase Agreement. This type of agreement is typically used in smaller corporations with a limited number of shareholders. In a Cross Purchase Agreement, each shareholder agrees to purchase the stock interests of the other shareholders upon the occurrence of specific events such as death, disability, retirement, or voluntary separation. Another type of California Stock Agreement is the Entity Purchase Agreement, also known as the Stock Redemption Agreement. This agreement is commonly used in larger corporations with multiple shareholders. In an Entity Purchase Agreement, the corporation itself agrees to buy back the stock interests of a shareholder upon the occurrence of the same triggering events mentioned earlier. These agreements outline the terms and conditions under which stock interests are bought and sold, including the valuation method(s), payment terms, and any restrictions or limitations on transferability. They provide a mechanism for the remaining shareholders or the corporation to buy out the departing shareholder's interests, ensuring a smooth transition and continuity of ownership. A California Stock Agreement typically includes provisions regarding the purchase price determination, whether it be through a pre-agreed formula, independent appraisal, or negotiation. The agreement also addresses the funding mechanism for the buyout, which can involve insurance policies, sinking funds, borrowing, or retained earnings. Other crucial provisions in a California Stock Agreement include right of first refusal, which allows existing shareholders or the corporation to match any bona fide offers made by third parties to purchase stock interests, as well as restrictions on transferability or encumbrances of shares. Overall, a California Stock Agreement — Buy Sell Agreement between Shareholders and Corporation is a vital tool for protecting the rights and interests of both shareholders and the corporation in the event of certain triggering events. It provides a clear roadmap for the orderly transfer and sale of shares, ensuring stability and continuity within the corporation's ownership structure.
