New Mexico 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 New Mexico Shareholders' Agreement between Two Shareholders of a Closely Held Corporation with Buy-Sell Provisions is a legally binding document that outlines the rights, responsibilities, and obligations of two shareholders in a closely held corporation based in New Mexico. This agreement includes provisions related to the buy-sell arrangement, which governs the buying and selling of shares between the shareholders. The agreement typically starts with an introductory section that identifies the parties involved, the corporation's name, and the purpose of the agreement. It also defines key terms and concepts used throughout the document, ensuring clarity for both parties. The agreement will detail the ownership percentages of each shareholder, showcasing their respective capital contributions, voting rights, and decision-making power within the corporation. It also addresses the roles and responsibilities of each shareholder, including any specific areas of expertise or qualifications they bring to the table. One crucial component of this type of agreement is the buy-sell provisions, which serve as a mechanism for the orderly transfer of shares in certain circumstances. Common scenarios triggering a buy-sell arrangement include death, disability, retirement, bankruptcy, or voluntary sale of shares. There are different types of buy-sell provisions that can be incorporated into a shareholder's agreement between two shareholders in a closely held corporation in New Mexico. Some common ones include: 1. Cross-Purchase Agreement: In this arrangement, each shareholder agrees to purchase the other shareholder's shares upon the occurrence of a specified triggering event. 2. Entity Purchase Agreement: Also known as a stock redemption agreement, the corporation agrees to purchase the shares of a shareholder upon the occurrence of a triggering event. 3. Hybrid or Wait-and-See Agreement: In this scenario, the agreement provides both shareholders the opportunity to purchase the shares of the other party or allow the corporation to acquire them. The choice is typically made at the occurrence of the triggering event, considering tax implications and financial circumstances. The agreement will outline the procedures and mechanisms for executing a buy-sell transaction, including valuation methodologies to determine the fair market value of shares, payment terms, and timelines. It may also establish funding mechanisms, such as life insurance policies or installment payments, to ensure that the purchasing shareholder can afford the shares. Other essential clauses found in a New Mexico Shareholders' Agreement between Two Shareholders of a Closely Held Corporation with Buy-Sell Provisions may cover dispute resolution mechanisms, confidentiality and non-compete agreements, non-solicitation clauses, and governance procedures. These clauses aim to protect the respective interests of the shareholders and maintain the stability and continuity of the closely held corporation. It is crucial to consider consulting with legal professionals to draft and customize a New Mexico Shareholders' Agreement between Two Shareholders of a Closely Held Corporation with Buy-Sell Provisions that aligns with the specific needs and circumstances of the shareholders and the corporation. Professional advice ensures legal compliance and addresses any unique considerations that may arise.

A New Mexico Shareholders' Agreement between Two Shareholders of a Closely Held Corporation with Buy-Sell Provisions is a legally binding document that outlines the rights, responsibilities, and obligations of two shareholders in a closely held corporation based in New Mexico. This agreement includes provisions related to the buy-sell arrangement, which governs the buying and selling of shares between the shareholders. The agreement typically starts with an introductory section that identifies the parties involved, the corporation's name, and the purpose of the agreement. It also defines key terms and concepts used throughout the document, ensuring clarity for both parties. The agreement will detail the ownership percentages of each shareholder, showcasing their respective capital contributions, voting rights, and decision-making power within the corporation. It also addresses the roles and responsibilities of each shareholder, including any specific areas of expertise or qualifications they bring to the table. One crucial component of this type of agreement is the buy-sell provisions, which serve as a mechanism for the orderly transfer of shares in certain circumstances. Common scenarios triggering a buy-sell arrangement include death, disability, retirement, bankruptcy, or voluntary sale of shares. There are different types of buy-sell provisions that can be incorporated into a shareholder's agreement between two shareholders in a closely held corporation in New Mexico. Some common ones include: 1. Cross-Purchase Agreement: In this arrangement, each shareholder agrees to purchase the other shareholder's shares upon the occurrence of a specified triggering event. 2. Entity Purchase Agreement: Also known as a stock redemption agreement, the corporation agrees to purchase the shares of a shareholder upon the occurrence of a triggering event. 3. Hybrid or Wait-and-See Agreement: In this scenario, the agreement provides both shareholders the opportunity to purchase the shares of the other party or allow the corporation to acquire them. The choice is typically made at the occurrence of the triggering event, considering tax implications and financial circumstances. The agreement will outline the procedures and mechanisms for executing a buy-sell transaction, including valuation methodologies to determine the fair market value of shares, payment terms, and timelines. It may also establish funding mechanisms, such as life insurance policies or installment payments, to ensure that the purchasing shareholder can afford the shares. Other essential clauses found in a New Mexico Shareholders' Agreement between Two Shareholders of a Closely Held Corporation with Buy-Sell Provisions may cover dispute resolution mechanisms, confidentiality and non-compete agreements, non-solicitation clauses, and governance procedures. These clauses aim to protect the respective interests of the shareholders and maintain the stability and continuity of the closely held corporation. It is crucial to consider consulting with legal professionals to draft and customize a New Mexico Shareholders' Agreement between Two Shareholders of a Closely Held Corporation with Buy-Sell Provisions that aligns with the specific needs and circumstances of the shareholders and the corporation. Professional advice ensures legal compliance and addresses any unique considerations that may arise.