Hawaii Shareholders' Agreement between Two Shareholders of Closely Held Corporation with Buy Sell Provisions

• Category: Corporations - Shareholders and Stock
• State: Multi-State
• Control #: US-02569BG
• Format: Word; Rich Text

Description

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 Hawaii Shareholders' Agreement is a legally binding document that outlines the rights and responsibilities of shareholders in a closely held corporation. This agreement typically includes provisions related to buy-sell agreements, which govern the circumstances under which a shareholder can sell their shares and the procedures to be followed in such a transaction. 1. Mandatory Buy-Sell Agreement: A mandatory buy-sell agreement is one type of Hawaii Shareholders' Agreement that requires shareholders to sell their shares to the other shareholder(s) in certain defined situations. These situations may include death, disability, retirement, bankruptcy, or divorce of a shareholder. This type of agreement ensures the smooth transition of ownership in the event of unforeseen circumstances. 2. Optional Buy-Sell Agreement: An optional buy-sell agreement, on the other hand, provides shareholders with the choice to buy or sell their shares, but it is not mandatory. This type of agreement allows shareholders to have flexibility in determining when and under what conditions they can buy or sell their shares. 3. Cross-Purchase Agreement: A cross-purchase agreement is a specific type of buy-sell provision that allows the remaining shareholders in a closely held corporation to purchase the shares of a departing or deceased shareholder. Each remaining shareholder typically agrees to purchase a proportional share of the departing shareholder's stock based on their respective ownership percentages. 4. Stock Redemption Agreement: A stock redemption agreement is another type of Hawaii Shareholders' Agreement that grants the corporation the option to repurchase the shares of a departing or deceased shareholder. In this scenario, the corporation buys back the shares using its retained earnings, providing liquidity to the departing shareholder or their estate. 5. Hybrid Agreement: A hybrid agreement combines elements of both a cross-purchase agreement and a stock redemption agreement. It allows both the remaining shareholders and the corporation to purchase the shares of a departing shareholder, providing more options and flexibility for all parties involved. In summary, a Hawaii Shareholders' Agreement between two shareholders of a closely held corporation with buy-sell provisions is a crucial document that defines the rights and obligations of shareholders and governs the process of selling shares. Different types of such agreements include mandatory buy-sell agreements, optional buy-sell agreements, cross-purchase agreements, stock redemption agreements, and hybrid agreements. These agreements help ensure the orderly transfer of ownership and protect the interests of shareholders in Hawaii's closely held corporations.

A Hawaii Shareholders' Agreement is a legally binding document that outlines the rights and responsibilities of shareholders in a closely held corporation. This agreement typically includes provisions related to buy-sell agreements, which govern the circumstances under which a shareholder can sell their shares and the procedures to be followed in such a transaction. 1. Mandatory Buy-Sell Agreement: A mandatory buy-sell agreement is one type of Hawaii Shareholders' Agreement that requires shareholders to sell their shares to the other shareholder(s) in certain defined situations. These situations may include death, disability, retirement, bankruptcy, or divorce of a shareholder. This type of agreement ensures the smooth transition of ownership in the event of unforeseen circumstances. 2. Optional Buy-Sell Agreement: An optional buy-sell agreement, on the other hand, provides shareholders with the choice to buy or sell their shares, but it is not mandatory. This type of agreement allows shareholders to have flexibility in determining when and under what conditions they can buy or sell their shares. 3. Cross-Purchase Agreement: A cross-purchase agreement is a specific type of buy-sell provision that allows the remaining shareholders in a closely held corporation to purchase the shares of a departing or deceased shareholder. Each remaining shareholder typically agrees to purchase a proportional share of the departing shareholder's stock based on their respective ownership percentages. 4. Stock Redemption Agreement: A stock redemption agreement is another type of Hawaii Shareholders' Agreement that grants the corporation the option to repurchase the shares of a departing or deceased shareholder. In this scenario, the corporation buys back the shares using its retained earnings, providing liquidity to the departing shareholder or their estate. 5. Hybrid Agreement: A hybrid agreement combines elements of both a cross-purchase agreement and a stock redemption agreement. It allows both the remaining shareholders and the corporation to purchase the shares of a departing shareholder, providing more options and flexibility for all parties involved. In summary, a Hawaii Shareholders' Agreement between two shareholders of a closely held corporation with buy-sell provisions is a crucial document that defines the rights and obligations of shareholders and governs the process of selling shares. Different types of such agreements include mandatory buy-sell agreements, optional buy-sell agreements, cross-purchase agreements, stock redemption agreements, and hybrid agreements. These agreements help ensure the orderly transfer of ownership and protect the interests of shareholders in Hawaii's closely held corporations.