New Mexico Buy-Sell Agreement between Shareholders of Closely Held Corporation

• Category: Corporations - Buy Sell
• State: Multi-State
• Control #: US-02462BG
• Format: Word; PDF; 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 New Mexico Buy-Sell Agreement is a legally binding contract between shareholders of a closely held corporation that outlines the terms and conditions for the buying and selling of shares. This agreement helps ensure a smooth transition of ownership in the event of certain triggering events such as retirement, death, disability, or voluntary departure of a shareholder. In New Mexico, there are several types of Buy-Sell Agreements that shareholders of closely held corporations can choose from, depending on their specific needs and preferences. These agreements include: 1. Cross-Purchase Agreement: This type of agreement allows the remaining shareholders to purchase the shares of a departing shareholder. Each shareholder agrees to purchase a proportionate share of the departing shareholder's shares, based on their ownership percentage. 2. Redemption Agreement: In this agreement, the corporation itself agrees to buy back the shares of a departing shareholder. The corporation must have sufficient funds or access to financing to repurchase the shares. 3. Hybrid Agreement: As the name suggests, this agreement combines elements of both a cross-purchase agreement and a redemption agreement. The remaining shareholders and the corporation have the option to purchase the shares of a departing shareholder, providing flexibility and additional options in case of triggering events. 4. Wait-and-See Agreement: This agreement allows the shareholders to delay deciding between a cross-purchase or redemption agreement until a triggering event actually occurs. This provides flexibility and allows shareholders to assess the situation before making a decision. A New Mexico Buy-Sell Agreement typically includes various key provisions, including the purchase price or valuation method for the shares, terms for funding the purchase (e.g., through insurance or installment payments), restrictions on transfer or sale of shares to outside parties, and procedures for dispute resolution. The use of relevant keywords in this content description could include: New Mexico Buy-Sell Agreement, shareholders, closely held corporation, triggering events, cross-purchase agreement, redemption agreement, hybrid agreement, wait-and-see agreement, purchase price, valuation method, funding, insurance, installment payments, restrictions on transfer, dispute resolution.

A New Mexico Buy-Sell Agreement is a legally binding contract between shareholders of a closely held corporation that outlines the terms and conditions for the buying and selling of shares. This agreement helps ensure a smooth transition of ownership in the event of certain triggering events such as retirement, death, disability, or voluntary departure of a shareholder. In New Mexico, there are several types of Buy-Sell Agreements that shareholders of closely held corporations can choose from, depending on their specific needs and preferences. These agreements include: 1. Cross-Purchase Agreement: This type of agreement allows the remaining shareholders to purchase the shares of a departing shareholder. Each shareholder agrees to purchase a proportionate share of the departing shareholder's shares, based on their ownership percentage. 2. Redemption Agreement: In this agreement, the corporation itself agrees to buy back the shares of a departing shareholder. The corporation must have sufficient funds or access to financing to repurchase the shares. 3. Hybrid Agreement: As the name suggests, this agreement combines elements of both a cross-purchase agreement and a redemption agreement. The remaining shareholders and the corporation have the option to purchase the shares of a departing shareholder, providing flexibility and additional options in case of triggering events. 4. Wait-and-See Agreement: This agreement allows the shareholders to delay deciding between a cross-purchase or redemption agreement until a triggering event actually occurs. This provides flexibility and allows shareholders to assess the situation before making a decision. A New Mexico Buy-Sell Agreement typically includes various key provisions, including the purchase price or valuation method for the shares, terms for funding the purchase (e.g., through insurance or installment payments), restrictions on transfer or sale of shares to outside parties, and procedures for dispute resolution. The use of relevant keywords in this content description could include: New Mexico Buy-Sell Agreement, shareholders, closely held corporation, triggering events, cross-purchase agreement, redemption agreement, hybrid agreement, wait-and-see agreement, purchase price, valuation method, funding, insurance, installment payments, restrictions on transfer, dispute resolution.