Ohio 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. Ohio Shareholders' Agreement between Two Shareholders of Closely Held Corporation with Buy Sell Provisions is a legally binding contract that outlines the rights, responsibilities, and obligations of two shareholders in a closely held corporation based in the state of Ohio. This agreement is designed to govern the relationship and operations of the shareholders, providing a framework for decision-making, dispute resolution, and the potential sale or transfer of shares. In Ohio, there are various types of shareholders' agreements between two shareholders of a closely held corporation with buy-sell provisions. Some of them include: 1. Cross-Purchase Agreement: This type of agreement allows each shareholder to purchase the other shareholder's shares upon certain triggering events, such as death, disability, retirement, or voluntary departure from the corporation. This ensures a smooth transition of ownership and provides a mechanism for determining the value of shares. 2. Stock Redemption Agreement: In this agreement, the corporation agrees to redeem the shares of the departing shareholder upon a triggering event. The redemption is usually funded through corporate assets or corporate-owned life insurance policies. This type of agreement simplifies ownership transitions and ensures the continuity of the corporation's operations. 3. Hybrid Agreement: A hybrid agreement combines features of both cross-purchase and stock redemption agreements. It provides flexibility to the shareholders in selecting the most appropriate method of transferring shares depending on the circumstances. The agreement may include provisions for both shareholders and the corporation to purchase shares in certain events. Key provisions that can be found in an Ohio Shareholders' Agreement with buy-sell provisions include: 1. Buy-Sell Triggers: Clearly defined events that would trigger the buy-sell provisions, such as death, disability, retirement, resignation, or divorce of a shareholder. These events help determine when a shareholder may be required to sell their shares. 2. Valuation Method: A detailed description of the method used to determine the value of the shares, such as an independent appraisal, book value, or a predetermined formula. This ensures a fair and consistent valuation process. 3. Restrictions on Transfer: Provisions that limit the shareholders' ability to sell, transfer, or assign their shares without the consent of the other shareholder or the corporation. These restrictions help maintain control and prevent conflicts of interest. 4. Funding Mechanisms: Outlines the financing arrangements to facilitate the purchase of shares, such as the establishment of sinking funds, corporate-owned life insurance policies, or utilizing corporate profits. 5. Dispute Resolution: Procedures for resolving disagreements or disputes that may arise between the shareholders, such as through mediation or arbitration, to maintain a harmonious working relationship. 6. Non-Compete and Non-Disclosure Clauses: Restrictions on the shareholders' ability to engage in competing business activities or disclose confidential information to protect the corporation's interests and trade secrets. An Ohio Shareholders' Agreement between Two Shareholders of Closely Held Corporation with Buy Sell Provisions is a crucial document that ensures a smooth transition, protects the interests of both shareholders, and provides a clear framework for resolving any potential conflicts. It is recommended to consult with a qualified attorney specializing in corporate law to draft and customize the agreement according to the specific needs and circumstances of the closely held corporation.

Ohio Shareholders' Agreement between Two Shareholders of Closely Held Corporation with Buy Sell Provisions is a legally binding contract that outlines the rights, responsibilities, and obligations of two shareholders in a closely held corporation based in the state of Ohio. This agreement is designed to govern the relationship and operations of the shareholders, providing a framework for decision-making, dispute resolution, and the potential sale or transfer of shares. In Ohio, there are various types of shareholders' agreements between two shareholders of a closely held corporation with buy-sell provisions. Some of them include: 1. Cross-Purchase Agreement: This type of agreement allows each shareholder to purchase the other shareholder's shares upon certain triggering events, such as death, disability, retirement, or voluntary departure from the corporation. This ensures a smooth transition of ownership and provides a mechanism for determining the value of shares. 2. Stock Redemption Agreement: In this agreement, the corporation agrees to redeem the shares of the departing shareholder upon a triggering event. The redemption is usually funded through corporate assets or corporate-owned life insurance policies. This type of agreement simplifies ownership transitions and ensures the continuity of the corporation's operations. 3. Hybrid Agreement: A hybrid agreement combines features of both cross-purchase and stock redemption agreements. It provides flexibility to the shareholders in selecting the most appropriate method of transferring shares depending on the circumstances. The agreement may include provisions for both shareholders and the corporation to purchase shares in certain events. Key provisions that can be found in an Ohio Shareholders' Agreement with buy-sell provisions include: 1. Buy-Sell Triggers: Clearly defined events that would trigger the buy-sell provisions, such as death, disability, retirement, resignation, or divorce of a shareholder. These events help determine when a shareholder may be required to sell their shares. 2. Valuation Method: A detailed description of the method used to determine the value of the shares, such as an independent appraisal, book value, or a predetermined formula. This ensures a fair and consistent valuation process. 3. Restrictions on Transfer: Provisions that limit the shareholders' ability to sell, transfer, or assign their shares without the consent of the other shareholder or the corporation. These restrictions help maintain control and prevent conflicts of interest. 4. Funding Mechanisms: Outlines the financing arrangements to facilitate the purchase of shares, such as the establishment of sinking funds, corporate-owned life insurance policies, or utilizing corporate profits. 5. Dispute Resolution: Procedures for resolving disagreements or disputes that may arise between the shareholders, such as through mediation or arbitration, to maintain a harmonious working relationship. 6. Non-Compete and Non-Disclosure Clauses: Restrictions on the shareholders' ability to engage in competing business activities or disclose confidential information to protect the corporation's interests and trade secrets. An Ohio Shareholders' Agreement between Two Shareholders of Closely Held Corporation with Buy Sell Provisions is a crucial document that ensures a smooth transition, protects the interests of both shareholders, and provides a clear framework for resolving any potential conflicts. It is recommended to consult with a qualified attorney specializing in corporate law to draft and customize the agreement according to the specific needs and circumstances of the closely held corporation.