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.
The Texas Stock Agreement, also known as the Texas Buy-Sell Agreement, is a legal contract that outlines the terms and conditions for the buyback or transfer of shares between shareholders and a corporation in Texas. This agreement ensures a smooth and orderly transition of shares in various scenarios such as death, disability, retirement, or voluntary sale. This agreement serves several important purposes for both shareholders and the corporation. Firstly, it ensures continuity of ownership and control within the corporation. In cases where a shareholder wants to sell their shares, the agreement establishes a pre-determined mechanism and price for the transaction. This helps prevent disputes and delays in the transfer process and promotes fair treatment of all parties involved. There are different types of Texas Stock Agreement — Buy-Sell Agreements which can be tailored to suit specific circumstances and shareholder preferences. Some common types include: 1. Cross-Purchase Agreement: In this type of agreement, individual shareholders within the corporation have the option to purchase the shares from a selling shareholder. This often occurs in smaller corporations where there are a limited number of shareholders. 2. Entity-Purchase Agreement: Here, the corporation itself is responsible for buying back the shares from the selling shareholder. The corporation can use its own funds or obtain financing to facilitate the purchase. This type is typically utilized by larger corporations with a higher number of shareholders. 3. Wait-and-See Agreement: This type allows for flexibility by giving the first right of refusal to the remaining shareholders in the event of a voluntary sale. If none of the shareholders exercise their right, the corporation itself can choose to buy back the shares. The Texas Stock Agreement — Buy Sell Agreement between Shareholders and Corporation typically covers various provisions, including the purchase price, the method of valuation for shares, financing arrangements, payment terms, dispute resolution mechanisms, and restrictions on transferring shares to third parties. To ensure the agreement is legally enforceable, it is recommended to seek the assistance of an experienced corporate attorney who can customize the agreement based on the specific needs and circumstances of the shareholders and the corporation.
