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.
Michigan Stock Agreement, also known as a Buy Sell Agreement between Shareholders and Corporation, is a legally binding contract that outlines the terms and conditions regarding the sale and purchase of stock in a corporation. This agreement provides a comprehensive framework for shareholders and the corporation to handle situations such as death, disability, retirement, or voluntary sale of shares. One type of Michigan Stock Agreement is the "Cross-Purchase Agreement." In this arrangement, individual shareholders enter into agreements amongst themselves to purchase the shares of any shareholder who wishes to sell. The purchase price is typically determined using a predetermined formula or a mutually agreed-upon appraisal. Another type is the "Entity Redemption Agreement," sometimes referred to as the "Stock Redemption Agreement." In this scenario, the corporation itself agrees to purchase the shares of a shareholder according to specified circumstances stated in the agreement. The corporation then redeems the shares directly from the selling shareholder, using funds or assets from its balance sheet. Key provisions typically included in a Michigan Stock Agreement are: 1. Buyout triggers: The agreement defines the triggering events that would initiate the buyout process, such as death, disability, retirement, divorce, bankruptcy, or voluntary resignation. Clear identification of these circumstances is crucial to avoid any ambiguity or disputes. 2. Valuation methods: The agreement establishes the methodology for valuing the shares, ensuring a fair and equitable price. Common valuation methods include book value, fair market value, or utilizing an independent appraiser to determine the value of the stock. 3. Funding mechanisms: The agreement specifies the funding mechanisms used to facilitate the buyout. Options may include life insurance policies, corporate earnings, sinking funds, or promissory notes by the purchasing party. 4. Restrictive covenants: The agreement may include non-compete clauses or restrictions on the selling shareholders, preventing them from engaging in similar businesses or soliciting clients of the corporation for a specific period after selling their shares. 5. Dispute resolution: To mitigate potential conflicts, the agreement often includes provisions for dispute resolution, such as arbitration or mediation, instead of litigation. Overall, a Michigan Stock Agreement — Buy Sell Agreement between Shareholders and Corporation plays a crucial role in ensuring a smooth transition of ownership and protecting the interests of shareholders and the corporation. Given the variations in individual circumstances, shareholders are advised to consult legal and financial professionals to tailor the agreement to their specific needs.Michigan Stock Agreement, also known as a Buy Sell Agreement between Shareholders and Corporation, is a legally binding contract that outlines the terms and conditions regarding the sale and purchase of stock in a corporation. This agreement provides a comprehensive framework for shareholders and the corporation to handle situations such as death, disability, retirement, or voluntary sale of shares. One type of Michigan Stock Agreement is the "Cross-Purchase Agreement." In this arrangement, individual shareholders enter into agreements amongst themselves to purchase the shares of any shareholder who wishes to sell. The purchase price is typically determined using a predetermined formula or a mutually agreed-upon appraisal. Another type is the "Entity Redemption Agreement," sometimes referred to as the "Stock Redemption Agreement." In this scenario, the corporation itself agrees to purchase the shares of a shareholder according to specified circumstances stated in the agreement. The corporation then redeems the shares directly from the selling shareholder, using funds or assets from its balance sheet. Key provisions typically included in a Michigan Stock Agreement are: 1. Buyout triggers: The agreement defines the triggering events that would initiate the buyout process, such as death, disability, retirement, divorce, bankruptcy, or voluntary resignation. Clear identification of these circumstances is crucial to avoid any ambiguity or disputes. 2. Valuation methods: The agreement establishes the methodology for valuing the shares, ensuring a fair and equitable price. Common valuation methods include book value, fair market value, or utilizing an independent appraiser to determine the value of the stock. 3. Funding mechanisms: The agreement specifies the funding mechanisms used to facilitate the buyout. Options may include life insurance policies, corporate earnings, sinking funds, or promissory notes by the purchasing party. 4. Restrictive covenants: The agreement may include non-compete clauses or restrictions on the selling shareholders, preventing them from engaging in similar businesses or soliciting clients of the corporation for a specific period after selling their shares. 5. Dispute resolution: To mitigate potential conflicts, the agreement often includes provisions for dispute resolution, such as arbitration or mediation, instead of litigation. Overall, a Michigan Stock Agreement — Buy Sell Agreement between Shareholders and Corporation plays a crucial role in ensuring a smooth transition of ownership and protecting the interests of shareholders and the corporation. Given the variations in individual circumstances, shareholders are advised to consult legal and financial professionals to tailor the agreement to their specific needs.
