Michigan 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 Michigan Shareholders' Agreement is a legally binding contract between two shareholders of a closely held corporation in the state of Michigan. This agreement outlines the rights, responsibilities, and obligations of the shareholders in relation to their investment in the corporation. It is especially important in situations where there are only a few shareholders, and they play an active role in the day-to-day operations of the company. One significant provision often included in a Michigan Shareholders' Agreement is the buy-sell provision. This provision establishes a mechanism for how shares of the corporation can be bought or sold in certain circumstances. Generally, buy-sell provisions are implemented to provide a fair and orderly process in situations such as death, disability, retirement, or voluntary or involuntary termination of employment of a shareholder. The agreement will specify the valuation method to determine the price of the shares, as well as the time frame and terms for the sale or purchase. There are different types of Michigan Shareholders' Agreement between Two Shareholders of Closely Held Corporation with Buy Sell Provisions, including: 1. Cross-Purchase Agreement: This type of agreement allows each shareholder to buy an equal proportionate share of the exiting shareholder's stake in the company. For example, if one shareholder wishes to sell their shares, the remaining shareholder(s) can purchase those shares in proportion to their existing ownership. 2. Stock Redemption Agreement: In this type of agreement, the corporation itself buys back the shares from the exiting shareholder. The remaining shareholder(s) do not directly purchase the shares but retain their existing ownership percentage as the corporation acquires the shares. 3. Hybrid Agreement: This type of agreement combines elements of the cross-purchase and stock redemption agreements. Here, both the remaining shareholder(s) and the corporation have the option to purchase the shares of the exiting shareholder. The choice of who buys the shares can be determined by factors such as tax implications or financial abilities. In conclusion, a Michigan Shareholders' Agreement between Two Shareholders of Closely Held Corporation with Buy Sell Provisions is a crucial document that establishes the rights and obligations of shareholders in relation to their investment. The buy-sell provisions provide a structured approach for the purchase or sale of shares in specific situations. The specific type of agreement, whether cross-purchase, stock redemption, or hybrid, depends on the preferences and circumstances of the shareholders involved.

A Michigan Shareholders' Agreement is a legally binding contract between two shareholders of a closely held corporation in the state of Michigan. This agreement outlines the rights, responsibilities, and obligations of the shareholders in relation to their investment in the corporation. It is especially important in situations where there are only a few shareholders, and they play an active role in the day-to-day operations of the company. One significant provision often included in a Michigan Shareholders' Agreement is the buy-sell provision. This provision establishes a mechanism for how shares of the corporation can be bought or sold in certain circumstances. Generally, buy-sell provisions are implemented to provide a fair and orderly process in situations such as death, disability, retirement, or voluntary or involuntary termination of employment of a shareholder. The agreement will specify the valuation method to determine the price of the shares, as well as the time frame and terms for the sale or purchase. There are different types of Michigan Shareholders' Agreement between Two Shareholders of Closely Held Corporation with Buy Sell Provisions, including: 1. Cross-Purchase Agreement: This type of agreement allows each shareholder to buy an equal proportionate share of the exiting shareholder's stake in the company. For example, if one shareholder wishes to sell their shares, the remaining shareholder(s) can purchase those shares in proportion to their existing ownership. 2. Stock Redemption Agreement: In this type of agreement, the corporation itself buys back the shares from the exiting shareholder. The remaining shareholder(s) do not directly purchase the shares but retain their existing ownership percentage as the corporation acquires the shares. 3. Hybrid Agreement: This type of agreement combines elements of the cross-purchase and stock redemption agreements. Here, both the remaining shareholder(s) and the corporation have the option to purchase the shares of the exiting shareholder. The choice of who buys the shares can be determined by factors such as tax implications or financial abilities. In conclusion, a Michigan Shareholders' Agreement between Two Shareholders of Closely Held Corporation with Buy Sell Provisions is a crucial document that establishes the rights and obligations of shareholders in relation to their investment. The buy-sell provisions provide a structured approach for the purchase or sale of shares in specific situations. The specific type of agreement, whether cross-purchase, stock redemption, or hybrid, depends on the preferences and circumstances of the shareholders involved.