New York 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 New York Buy-Sell Agreement between Two Shareholders of a Closely Held Corporation is a legally binding contract that outlines the terms and conditions for the purchase and sale of shares between two shareholders in a closely held corporation based in New York. This agreement is essential to govern the company's ownership structure and protect the interests of both parties involved. Being a vital component of corporate governance, the New York Buy-Sell Agreement ensures a smooth transition of shares and addresses various scenarios such as death, disability, retirement, divorce, disagreement, or desire to exit the company, providing a framework for fair and equitable resolution. There are different types of New York Buy-Sell Agreements, which include: 1. Cross-Purchase Agreement: In this type of agreement, each shareholder has the right and responsibility to purchase the other shareholder's shares in the event of a triggering event. 2. Stock Redemption Agreement: This arrangement allows the corporation itself to buy back the shares of a shareholder who wishes to sell due to a triggering event. 3. Hybrid Agreement: This type combines elements of both the cross-purchase and stock redemption agreements, providing flexibility for shareholders to decide between buying back shares individually or allowing the corporation to repurchase them. Key elements typically covered in a New York Buy-Sell Agreement between Two Shareholders of a Closely Held Corporation include: — Share Transfer Mechanism: The agreement outlines the process and terms for transferring shares, including provisions for pricing, valuation, and payment terms. — Triggering Events: The agreement identifies events that trigger the buy-sell provisions, such as death, disability, retirement, divorce, or disagreements between shareholders. — Purchase Price Determination: The agreement establishes a mechanism to determine the value of the shares being bought or sold, often involving independent appraisals or predetermined formulas. — Funding Provisions: The agreement specifies how the purchasing shareholder will fund the buyout, which can include cash, installment payments, or the use of an insurance policy. — Right of First Refusal: The agreement may grant the remaining shareholders the right of first refusal to purchase the shares before they can be sold to a third party. — Non-Compete and Non-Disclosure: The agreement may include provisions to protect the corporation's business interests, such as non-compete and non-disclosure clauses. A New York Buy-Sell Agreement between Two Shareholders of a Closely Held Corporation provides a comprehensive framework for handling shareholder transitions and allows for a smooth and organized transfer of ownership, ensuring stability and continuity within the closely held corporation.

A New York Buy-Sell Agreement between Two Shareholders of a Closely Held Corporation is a legally binding contract that outlines the terms and conditions for the purchase and sale of shares between two shareholders in a closely held corporation based in New York. This agreement is essential to govern the company's ownership structure and protect the interests of both parties involved. Being a vital component of corporate governance, the New York Buy-Sell Agreement ensures a smooth transition of shares and addresses various scenarios such as death, disability, retirement, divorce, disagreement, or desire to exit the company, providing a framework for fair and equitable resolution. There are different types of New York Buy-Sell Agreements, which include: 1. Cross-Purchase Agreement: In this type of agreement, each shareholder has the right and responsibility to purchase the other shareholder's shares in the event of a triggering event. 2. Stock Redemption Agreement: This arrangement allows the corporation itself to buy back the shares of a shareholder who wishes to sell due to a triggering event. 3. Hybrid Agreement: This type combines elements of both the cross-purchase and stock redemption agreements, providing flexibility for shareholders to decide between buying back shares individually or allowing the corporation to repurchase them. Key elements typically covered in a New York Buy-Sell Agreement between Two Shareholders of a Closely Held Corporation include: — Share Transfer Mechanism: The agreement outlines the process and terms for transferring shares, including provisions for pricing, valuation, and payment terms. — Triggering Events: The agreement identifies events that trigger the buy-sell provisions, such as death, disability, retirement, divorce, or disagreements between shareholders. — Purchase Price Determination: The agreement establishes a mechanism to determine the value of the shares being bought or sold, often involving independent appraisals or predetermined formulas. — Funding Provisions: The agreement specifies how the purchasing shareholder will fund the buyout, which can include cash, installment payments, or the use of an insurance policy. — Right of First Refusal: The agreement may grant the remaining shareholders the right of first refusal to purchase the shares before they can be sold to a third party. — Non-Compete and Non-Disclosure: The agreement may include provisions to protect the corporation's business interests, such as non-compete and non-disclosure clauses. A New York Buy-Sell Agreement between Two Shareholders of a Closely Held Corporation provides a comprehensive framework for handling shareholder transitions and allows for a smooth and organized transfer of ownership, ensuring stability and continuity within the closely held corporation.