North Dakota Buy-Sell Agreement between Two Shareholders of Closely Held Corporation

• Category: Corporations - Contracts
• State: Multi-State
• Control #: US-02553BG
• 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. A North Dakota Buy-Sell Agreement between two shareholders of a closely held corporation is a legally binding document that outlines the specifics of buying and selling shares between the shareholders in the state of North Dakota. This agreement sets forth the terms and conditions under which a shareholder may sell their shares to the other shareholder or to the corporation itself. Keywords: North Dakota, Buy-Sell Agreement, shareholders, closely held corporation, shares, terms and conditions, sell, buy, legal document There are three main types of North Dakota Buy-Sell Agreements between two shareholders of a closely held corporation that can be named: 1. Cross-Purchase Agreement: In this type of agreement, each shareholder agrees to buy the other shareholder's shares upon the occurrence of a triggering event such as death, disability, retirement, or voluntary transfer. The agreement sets the valuation of the shares and the method of payment, ensuring a smooth transition of ownership within the corporation. 2. Stock Redemption Agreement: This agreement allows the corporation itself to buy back the shares of the shareholder upon the occurrence of a triggering event. The corporation uses its own funds to repurchase the shares, which are then retired or redistributed among the remaining shareholders. 3. Hybrid Agreement: A hybrid agreement combines elements of both the Cross-Purchase Agreement and the Stock Redemption Agreement. In this type of agreement, the remaining shareholders have the first right of refusal to purchase the shares, and if they decline, the corporation has the option to repurchase the shares. It is important for shareholders of closely held corporations in North Dakota to consider implementing a Buy-Sell Agreement to protect the interests of all parties involved and to ensure a smooth transition of ownership during unexpected events. Seeking professional legal advice while drafting these agreements is highly recommended ensuring compliance with North Dakota laws and to customize the agreement to fit the specific needs of the shareholders and the corporation.

A North Dakota Buy-Sell Agreement between two shareholders of a closely held corporation is a legally binding document that outlines the specifics of buying and selling shares between the shareholders in the state of North Dakota. This agreement sets forth the terms and conditions under which a shareholder may sell their shares to the other shareholder or to the corporation itself. Keywords: North Dakota, Buy-Sell Agreement, shareholders, closely held corporation, shares, terms and conditions, sell, buy, legal document There are three main types of North Dakota Buy-Sell Agreements between two shareholders of a closely held corporation that can be named: 1. Cross-Purchase Agreement: In this type of agreement, each shareholder agrees to buy the other shareholder's shares upon the occurrence of a triggering event such as death, disability, retirement, or voluntary transfer. The agreement sets the valuation of the shares and the method of payment, ensuring a smooth transition of ownership within the corporation. 2. Stock Redemption Agreement: This agreement allows the corporation itself to buy back the shares of the shareholder upon the occurrence of a triggering event. The corporation uses its own funds to repurchase the shares, which are then retired or redistributed among the remaining shareholders. 3. Hybrid Agreement: A hybrid agreement combines elements of both the Cross-Purchase Agreement and the Stock Redemption Agreement. In this type of agreement, the remaining shareholders have the first right of refusal to purchase the shares, and if they decline, the corporation has the option to repurchase the shares. It is important for shareholders of closely held corporations in North Dakota to consider implementing a Buy-Sell Agreement to protect the interests of all parties involved and to ensure a smooth transition of ownership during unexpected events. Seeking professional legal advice while drafting these agreements is highly recommended ensuring compliance with North Dakota laws and to customize the agreement to fit the specific needs of the shareholders and the corporation.