Utah 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. Utah Buy-Sell Agreement between Shareholders of Closely Held Corporation is a legal document that outlines the rules and regulations governing the transfer of shares between existing shareholders of a closely held corporation in the state of Utah. The purpose of a Buy-Sell Agreement is to provide a clear framework for the buying and selling of shares, ensuring a smooth transition and preventing conflicts among shareholders. This agreement can be customized to meet the specific needs and circumstances of the closely held corporation. There are several types of Buy-Sell Agreements that shareholders in a closely held corporation in Utah may consider: 1. Cross-Purchase Buy-Sell Agreement: In this type, individual shareholders agree to buy each other's shares in the event of an agreed-upon trigger event, such as the death, disability, retirement, or voluntary departure of a shareholder. 2. Redemption Buy-Sell Agreement: Here, the corporation itself agrees to buy the shares of a departing shareholder. This can be done by using corporate funds or through a loan arrangement. 3. Hybrid Buy-Sell Agreement: Combining elements of both the cross-purchase and redemption agreements, a hybrid agreement allows shareholders and the corporation to have the option to purchase shares, depending on the specific trigger event. Key provisions often included in a Utah Buy-Sell Agreement include: — Triggering Events: Clearly defining events that will trigger the buyout, such as death, disability, retirement, divorce, bankruptcy, or voluntary departure. — Purchase Price: Determining how the shares will be valued at the time of buyout and the payment terms, whether it be a lump sum, installment payments, or through corporate-held life insurance policies. — Right of First Refusal: Granting existing shareholders the first opportunity to purchase the shares being sold before they can be offered to external parties. — Non-Compete and Non-Solicitation Clauses: Prohibiting departing shareholders from competing with the corporation or soliciting employees or customers for a specific period of time. — Dispute Resolution: Outlining mechanisms to resolve any disputes arising from the agreement, such as mediation or arbitration. Utah Buy-Sell Agreements between Shareholders of Closely Held Corporations are crucial for protecting the interests and ensuring a smooth transition of ownership within closely held corporations in the state. It is advisable to consult with a qualified attorney with experience in corporate law to draft or review such agreements to ensure compliance with Utah state laws and the unique needs of the corporation and its shareholders.

Utah Buy-Sell Agreement between Shareholders of Closely Held Corporation is a legal document that outlines the rules and regulations governing the transfer of shares between existing shareholders of a closely held corporation in the state of Utah. The purpose of a Buy-Sell Agreement is to provide a clear framework for the buying and selling of shares, ensuring a smooth transition and preventing conflicts among shareholders. This agreement can be customized to meet the specific needs and circumstances of the closely held corporation. There are several types of Buy-Sell Agreements that shareholders in a closely held corporation in Utah may consider: 1. Cross-Purchase Buy-Sell Agreement: In this type, individual shareholders agree to buy each other's shares in the event of an agreed-upon trigger event, such as the death, disability, retirement, or voluntary departure of a shareholder. 2. Redemption Buy-Sell Agreement: Here, the corporation itself agrees to buy the shares of a departing shareholder. This can be done by using corporate funds or through a loan arrangement. 3. Hybrid Buy-Sell Agreement: Combining elements of both the cross-purchase and redemption agreements, a hybrid agreement allows shareholders and the corporation to have the option to purchase shares, depending on the specific trigger event. Key provisions often included in a Utah Buy-Sell Agreement include: — Triggering Events: Clearly defining events that will trigger the buyout, such as death, disability, retirement, divorce, bankruptcy, or voluntary departure. — Purchase Price: Determining how the shares will be valued at the time of buyout and the payment terms, whether it be a lump sum, installment payments, or through corporate-held life insurance policies. — Right of First Refusal: Granting existing shareholders the first opportunity to purchase the shares being sold before they can be offered to external parties. — Non-Compete and Non-Solicitation Clauses: Prohibiting departing shareholders from competing with the corporation or soliciting employees or customers for a specific period of time. — Dispute Resolution: Outlining mechanisms to resolve any disputes arising from the agreement, such as mediation or arbitration. Utah Buy-Sell Agreements between Shareholders of Closely Held Corporations are crucial for protecting the interests and ensuring a smooth transition of ownership within closely held corporations in the state. It is advisable to consult with a qualified attorney with experience in corporate law to draft or review such agreements to ensure compliance with Utah state laws and the unique needs of the corporation and its shareholders.