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 North Carolina Stock Agreement, also known as a Buy Sell Agreement between Shareholders and Corporation, is a legal contract that outlines the terms and conditions for buying and selling stock shares in a corporation. This agreement is essential to protect the interests of both shareholders and the corporation, ensuring a smooth and fair transfer of ownership. The agreement typically includes several key provisions, such as: 1. Purchase and Sale: The agreement specifies how and when shareholders can buy and sell their stock shares. It outlines the process for a shareholder to sell their shares to other shareholders or the corporation itself. This provision helps maintain control over the ownership structure and prevents unwanted transfers. 2. Valuation: Valuing the stock shares is crucial when determining the selling price. The agreement may include mechanisms or formulas for determining the fair market value of the shares at the time of sale. This ensures that the selling price reflects the true value of the shares and avoids conflicts over pricing. 3. Right of First Refusal: This provision grants existing shareholders the priority to purchase the shares before the corporation offers them to outside parties. It allows shareholders to maintain control and prevent unwanted individuals from becoming shareholders. 4. Triggering Events: Certain events may trigger the buy-sell agreement, such as death, disability, retirement, or bankruptcy of a shareholder. When triggered, the agreement specifies how the shares will be sold, who can purchase them, and at what price. This provision enables a smooth transition of ownership during unexpected circumstances. 5. Funding Mechanisms: To ensure liquidity for buying out shares, the agreement may establish funding mechanisms like life insurance policies or installment payments. The use of insurance policies can provide the necessary funds to purchase the shares in the event of a shareholder's death, while installment payments allow for a phased buyout. In addition to these general provisions, North Carolina Stock Agreements — Buy Sell Agreements between Shareholders and Corporation can have various types based on specific circumstances, such as: 1. Cross-Purchase Agreement: This type of agreement is between individual shareholders, where each party agrees to buy the shares of a departing shareholder. It is commonly used in smaller corporations where there are only a few shareholders. 2. Stock Redemption Agreement: This agreement involves the corporation buying back the shares when a triggering event occurs. The corporation becomes the purchaser and can hold the shares as treasury stocks or redistribute them to remaining shareholders. 3. Hybrid Agreement: A hybrid agreement combines elements of both cross-purchase and stock redemption agreements. It offers flexibility by allowing some shareholders to buy shares while the corporation buys others. In conclusion, a North Carolina Stock Agreement — Buy Sell Agreement between Shareholders and Corporation is a critical legal document that governs the buying and selling of stock shares. By addressing various scenarios and providing clear guidelines, it helps ensure a fair and orderly transfer of ownership while protecting the interests of shareholders and the corporation.A North Carolina Stock Agreement, also known as a Buy Sell Agreement between Shareholders and Corporation, is a legal contract that outlines the terms and conditions for buying and selling stock shares in a corporation. This agreement is essential to protect the interests of both shareholders and the corporation, ensuring a smooth and fair transfer of ownership. The agreement typically includes several key provisions, such as: 1. Purchase and Sale: The agreement specifies how and when shareholders can buy and sell their stock shares. It outlines the process for a shareholder to sell their shares to other shareholders or the corporation itself. This provision helps maintain control over the ownership structure and prevents unwanted transfers. 2. Valuation: Valuing the stock shares is crucial when determining the selling price. The agreement may include mechanisms or formulas for determining the fair market value of the shares at the time of sale. This ensures that the selling price reflects the true value of the shares and avoids conflicts over pricing. 3. Right of First Refusal: This provision grants existing shareholders the priority to purchase the shares before the corporation offers them to outside parties. It allows shareholders to maintain control and prevent unwanted individuals from becoming shareholders. 4. Triggering Events: Certain events may trigger the buy-sell agreement, such as death, disability, retirement, or bankruptcy of a shareholder. When triggered, the agreement specifies how the shares will be sold, who can purchase them, and at what price. This provision enables a smooth transition of ownership during unexpected circumstances. 5. Funding Mechanisms: To ensure liquidity for buying out shares, the agreement may establish funding mechanisms like life insurance policies or installment payments. The use of insurance policies can provide the necessary funds to purchase the shares in the event of a shareholder's death, while installment payments allow for a phased buyout. In addition to these general provisions, North Carolina Stock Agreements — Buy Sell Agreements between Shareholders and Corporation can have various types based on specific circumstances, such as: 1. Cross-Purchase Agreement: This type of agreement is between individual shareholders, where each party agrees to buy the shares of a departing shareholder. It is commonly used in smaller corporations where there are only a few shareholders. 2. Stock Redemption Agreement: This agreement involves the corporation buying back the shares when a triggering event occurs. The corporation becomes the purchaser and can hold the shares as treasury stocks or redistribute them to remaining shareholders. 3. Hybrid Agreement: A hybrid agreement combines elements of both cross-purchase and stock redemption agreements. It offers flexibility by allowing some shareholders to buy shares while the corporation buys others. In conclusion, a North Carolina Stock Agreement — Buy Sell Agreement between Shareholders and Corporation is a critical legal document that governs the buying and selling of stock shares. By addressing various scenarios and providing clear guidelines, it helps ensure a fair and orderly transfer of ownership while protecting the interests of shareholders and the corporation.
