Louisiana 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 Louisiana Shareholders' Agreement between Two Shareholders of a Closely Held Corporation with Buy-Sell Provisions is a legally binding document that outlines the rights, responsibilities, and obligations of two shareholders who hold an interest in a closely held corporation based in the state of Louisiana. This agreement provides a framework for the shareholders to govern their relationship, manage potential conflicts, and establish procedures for the sale and purchase of shares in the company. The main purpose of a Buy-Sell Provision within this agreement is to outline the circumstances under which a shareholder can sell their shares and the terms upon which they can be sold. This provision helps to ensure stability and continuity within the corporation by setting guidelines for the transfer of ownership. It offers protection to both shareholders by providing an agreed-upon mechanism for resolving any disputes that may arise during the buy-sell process. There are several types of Louisiana Shareholders' Agreements between Two Shareholders of a Closely Held Corporation with Buy-Sell Provisions. These include: 1. Cross-Purchase Agreement: In this type of agreement, each shareholder agrees to purchase the shares of the other shareholder in the event of a triggering event, such as death, disability, or retirement. This agreement allows the surviving shareholder to maintain control over the corporation. 2. Redemption Agreement: In a redemption agreement, the corporation agrees to repurchase the shares of the shareholder who is exiting due to a triggering event. The corporation uses its own funds to buy back the shares, thereby reducing the number of shareholders and increasing the ownership percentage of the remaining shareholder. 3. Hybrid Agreement: This type of agreement combines elements of both the cross-purchase and redemption agreements. It allows for flexibility in determining which party, either the other shareholder or the corporation, will purchase the exiting shareholder's shares based on the specific triggering event. Regardless of the type of agreement, key provisions that are typically included in a Louisiana Shareholders' Agreement with Buy-Sell Provisions are: — Notice and Offer: A provision that requires a shareholder who wishes to sell their shares to provide notice to the other shareholder(s) or the corporation. This provision sets out the process for making an offer to sell and the timeframe in which the other party must respond. — Purchase Price and Valuation: This provision establishes a method for determining the fair market value of the shares being sold. It may include the use of independent appraisers or a predetermined formula to determine the purchase price. — Funding Mechanisms: This provision outlines how the purchase price will be funded. It may include options such as cash payments, promissory notes, installment payments, or utilizing insurance policies in case of triggering events like death or disability. — Right of First Refusal: This provision grants existing shareholders the opportunity to purchase any shares being sold to a third party before they can be sold outside the corporation. — Dispute Resolution: A provision that establishes a mechanism for resolving disputes that may arise during the buy-sell process. This may include mediation, arbitration, or litigation. Overall, a Louisiana Shareholders' Agreement between Two Shareholders of a Closely Held Corporation with Buy-Sell Provisions plays a crucial role in protecting the rights and interests of the shareholders and ensuring a smooth transition of ownership within the corporation. Properly drafting and executing this agreement is essential in order to avoid potential conflicts and maintain the stability and success of the closely held corporation.

A Louisiana Shareholders' Agreement between Two Shareholders of a Closely Held Corporation with Buy-Sell Provisions is a legally binding document that outlines the rights, responsibilities, and obligations of two shareholders who hold an interest in a closely held corporation based in the state of Louisiana. This agreement provides a framework for the shareholders to govern their relationship, manage potential conflicts, and establish procedures for the sale and purchase of shares in the company. The main purpose of a Buy-Sell Provision within this agreement is to outline the circumstances under which a shareholder can sell their shares and the terms upon which they can be sold. This provision helps to ensure stability and continuity within the corporation by setting guidelines for the transfer of ownership. It offers protection to both shareholders by providing an agreed-upon mechanism for resolving any disputes that may arise during the buy-sell process. There are several types of Louisiana Shareholders' Agreements between Two Shareholders of a Closely Held Corporation with Buy-Sell Provisions. These include: 1. Cross-Purchase Agreement: In this type of agreement, each shareholder agrees to purchase the shares of the other shareholder in the event of a triggering event, such as death, disability, or retirement. This agreement allows the surviving shareholder to maintain control over the corporation. 2. Redemption Agreement: In a redemption agreement, the corporation agrees to repurchase the shares of the shareholder who is exiting due to a triggering event. The corporation uses its own funds to buy back the shares, thereby reducing the number of shareholders and increasing the ownership percentage of the remaining shareholder. 3. Hybrid Agreement: This type of agreement combines elements of both the cross-purchase and redemption agreements. It allows for flexibility in determining which party, either the other shareholder or the corporation, will purchase the exiting shareholder's shares based on the specific triggering event. Regardless of the type of agreement, key provisions that are typically included in a Louisiana Shareholders' Agreement with Buy-Sell Provisions are: — Notice and Offer: A provision that requires a shareholder who wishes to sell their shares to provide notice to the other shareholder(s) or the corporation. This provision sets out the process for making an offer to sell and the timeframe in which the other party must respond. — Purchase Price and Valuation: This provision establishes a method for determining the fair market value of the shares being sold. It may include the use of independent appraisers or a predetermined formula to determine the purchase price. — Funding Mechanisms: This provision outlines how the purchase price will be funded. It may include options such as cash payments, promissory notes, installment payments, or utilizing insurance policies in case of triggering events like death or disability. — Right of First Refusal: This provision grants existing shareholders the opportunity to purchase any shares being sold to a third party before they can be sold outside the corporation. — Dispute Resolution: A provision that establishes a mechanism for resolving disputes that may arise during the buy-sell process. This may include mediation, arbitration, or litigation. Overall, a Louisiana Shareholders' Agreement between Two Shareholders of a Closely Held Corporation with Buy-Sell Provisions plays a crucial role in protecting the rights and interests of the shareholders and ensuring a smooth transition of ownership within the corporation. Properly drafting and executing this agreement is essential in order to avoid potential conflicts and maintain the stability and success of the closely held corporation.