District of Columbia Agreement of Shareholders of a Close Corporation with Management by Shareholders

• Category: Corporations - Incorporation
• State: Multi-State
• Control #: US-0178BG
• Format: Word; Rich Text

Description

A close corporation is a corporation that is exempt from a number of the formal rules usually governing corporations, because of the small number of shareholders it has. The specifics vary by state, but usually a close corporation must not be publicly traded, and must have fewer than a set number of shareholders (usually 35 or so). A close corporation can generally be run directly by the shareholders (without a formal board of directors and without a formal annual meeting). The District of Columbia Agreement of Shareholders of a Close Corporation with Management by Shareholders is a legal document that outlines the terms and conditions governing the management and operation of a close corporation by its shareholders. This agreement serves as a crucial tool in ensuring smooth functioning, clarifying rights and responsibilities, and preventing disputes among shareholders. In the District of Columbia, there are various types of agreements that can be tailored to the specific needs and structure of the close corporation. These include: 1. Decision-Making Authority: The agreement outlines how decision-making authority is distributed among the shareholders. It specifies the process for making important decisions, such as electing the board of directors, approving financial decisions, and issuing new shares. 2. Management Structure: The agreement defines the management structure of the close corporation. It outlines the roles, responsibilities, and powers of the shareholders, directors, officers, and other key personnel involved in the daily operations of the business. 3. Share Transfer Restrictions: This agreement may include provisions that restrict the transfer of shares to maintain control and stability within the close corporation. These restrictions may include rights of first refusal, buy-sell provisions, or prohibitions on transferring shares to outsiders without prior shareholder approval. 4. Compensation and Dividends: The agreement establishes guidelines for the compensation of shareholders who actively participate in the management of the close corporation, such as salaries, bonuses, and profit-sharing arrangements. It also determines how profits and dividends will be distributed among the shareholders. 5. Dispute Resolution: In the event of disputes among shareholders or between shareholders and the corporation, the agreement may include provisions for alternative dispute resolution mechanisms such as mediation or arbitration. This is done to avoid costly and time-consuming litigation. 6. Succession Planning: Some agreements may address succession planning, including guidelines for the orderly transfer of ownership and management in the event of a shareholder's retirement, incapacity, or death. It may also include provisions for the purchase or redemption of shares. 7. Amendments and Termination: The agreement may outline the procedure for amending the document, requiring the consent of a specific number or percentage of shareholders. Additionally, it may address circumstances under which the agreement can be terminated or dissolved. Keywords: District of Columbia, Agreement of Shareholders, Close Corporation, Management by Shareholders, Decision-Making Authority, Management Structure, Share Transfer Restrictions, Compensation, Dividends, Dispute Resolution, Succession Planning, Amendments, Termination.

The District of Columbia Agreement of Shareholders of a Close Corporation with Management by Shareholders is a legal document that outlines the terms and conditions governing the management and operation of a close corporation by its shareholders. This agreement serves as a crucial tool in ensuring smooth functioning, clarifying rights and responsibilities, and preventing disputes among shareholders. In the District of Columbia, there are various types of agreements that can be tailored to the specific needs and structure of the close corporation. These include: 1. Decision-Making Authority: The agreement outlines how decision-making authority is distributed among the shareholders. It specifies the process for making important decisions, such as electing the board of directors, approving financial decisions, and issuing new shares. 2. Management Structure: The agreement defines the management structure of the close corporation. It outlines the roles, responsibilities, and powers of the shareholders, directors, officers, and other key personnel involved in the daily operations of the business. 3. Share Transfer Restrictions: This agreement may include provisions that restrict the transfer of shares to maintain control and stability within the close corporation. These restrictions may include rights of first refusal, buy-sell provisions, or prohibitions on transferring shares to outsiders without prior shareholder approval. 4. Compensation and Dividends: The agreement establishes guidelines for the compensation of shareholders who actively participate in the management of the close corporation, such as salaries, bonuses, and profit-sharing arrangements. It also determines how profits and dividends will be distributed among the shareholders. 5. Dispute Resolution: In the event of disputes among shareholders or between shareholders and the corporation, the agreement may include provisions for alternative dispute resolution mechanisms such as mediation or arbitration. This is done to avoid costly and time-consuming litigation. 6. Succession Planning: Some agreements may address succession planning, including guidelines for the orderly transfer of ownership and management in the event of a shareholder's retirement, incapacity, or death. It may also include provisions for the purchase or redemption of shares. 7. Amendments and Termination: The agreement may outline the procedure for amending the document, requiring the consent of a specific number or percentage of shareholders. Additionally, it may address circumstances under which the agreement can be terminated or dissolved. Keywords: District of Columbia, Agreement of Shareholders, Close Corporation, Management by Shareholders, Decision-Making Authority, Management Structure, Share Transfer Restrictions, Compensation, Dividends, Dispute Resolution, Succession Planning, Amendments, Termination.