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 Massachusetts Shareholders' Agreement with a Buy-Sell Agreement Allowing the Corporation the First Right of Refusal to Purchase the Shares of a Deceased Shareholder is a legally binding contract between the shareholders of a Massachusetts-based corporation. This provision ensures that if a shareholder passes away, their beneficiaries must offer the deceased shareholder's shares to the corporation before selling them to any third party. This right of first refusal provides the corporation with an opportunity to maintain control and ownership within the existing shareholder group. By incorporating this clause into the Shareholders' Agreement, the corporation can safeguard its ownership structure and avoid potential external influences from unknown third parties. This arrangement is particularly crucial in closely held corporations where maintaining control within the existing group of shareholders is of utmost importance. There are two common types of Massachusetts Shareholders' Agreements with Buy-Sell Agreements Allowing the Corporation the First Right of Refusal: 1. Voluntary Agreement: This type of agreement is drafted and agreed upon willingly by the shareholders of the corporation. The shareholders mutually decide to include a provision allowing the corporation the first right of refusal upon the death of a shareholder. This kind of agreement provides the shareholders with a sense of security and alignment of interests. 2. Statutory Agreement: Some jurisdictions, including Massachusetts, have specific statutes governing shareholders' agreements and corporate transactions. Massachusetts General Laws Chapter 156D, Section 6.01(b)(4), allows a corporation to include a provision in its bylaws or shareholders' agreement that grants the corporation the first right of refusal upon the death of a shareholder. In such cases, the agreement becomes binding by law, and all shareholders are subject to its terms. In both types of agreements, it is crucial to clearly define the process by which the deceased shareholder's shares should be offered to the corporation. This typically involves notifying the corporation in writing, providing relevant share details, and giving the corporation a specific time frame within which to respond and exercise its right of first refusal. The agreement should also address the valuation method for determining the price at which the corporation can repurchase the deceased shareholder's shares. Common methods include the use of fair market value or a predetermined formula agreed upon by the shareholders. Overall, a Massachusetts Shareholders' Agreement with a Buy-Sell Agreement Allowing the Corporation the First Right of Refusal to Purchase the Shares of a Deceased Shareholder is a protective measure that promotes stability and preserves the original ownership structure within a corporation. It allows the corporation to maintain control while providing a fair opportunity for the beneficiaries of a deceased shareholder to sell their shares.
