Virginia Agreement of Shareholders of a Close Corporation with Management by Shareholders

• Category: Corporations - Incorporation
• State: Multi-State
• Control #: US-0178BG
• Format: Word; Rich Text

Description

A close corporation is a corporation that is exempt from a number of the formal rules usually governing corporations, because of the small number of shareholders it has. The specifics vary by state, but usually a close corporation must not be publicly traded, and must have fewer than a set number of shareholders (usually 35 or so). A close corporation can generally be run directly by the shareholders (without a formal board of directors and without a formal annual meeting). The Virginia Agreement of Shareholders of a Close Corporation with Management by Shareholders, often referred to as the Shareholders' Agreement, is a legally binding contract that outlines the rights, obligations, and commitments of shareholders who are actively involved in managing a close corporation. This agreement is specific to Virginia and is a valuable tool for shareholders to ensure a smooth operation of their business while protecting their interests and defining their roles clearly. Keywords: Virginia, Agreement of Shareholders, Close Corporation, Management by Shareholders, legally binding contract, rights, obligations, commitments, smooth operation, business, protecting interests, roles. Types of Virginia Agreement of Shareholders of a Close Corporation with Management by Shareholders: 1. Basic Shareholders' Agreement: This type of agreement covers the fundamental aspects of the relationship between shareholders who actively participate in the management of a close corporation. It outlines their respective ownership percentages, decision-making processes, and important provisions regarding buyouts, transfers of shares, and dispute resolution methods. 2. Minority Protection Shareholders' Agreement: This variation of the agreement is specifically designed to safeguard the interests of minority shareholders in a close corporation. It incorporates provisions to prevent unfair treatment, dilution of their ownership, or marginalization in decision-making processes. It may include veto rights, preemptive rights, or the appointment of an independent director to ensure fair representation. 3. Shareholders' Agreement with Profit-Sharing: In some close corporations, shareholders may agree to distribute profits among themselves based on a predetermined formula. This type of agreement outlines the profit-sharing arrangements, clarifies the methods of calculating and distributing profits, and establishes guidelines for re-investments or withholding profits for future business growth. 4. Buy-Sell Agreement: This agreement comes into play when a shareholder wants to sell their shares, or when certain predetermined events occur, such as the death, disability, retirement, or termination of a shareholder. It sets the terms and conditions for the buying and selling of shares, including the valuation method, payment terms, and any necessary restrictions. 5. Non-Compete Shareholders' Agreement: If shareholders have concerns about competition from one another or the potential misuse of confidential information, a non-compete agreement can be included in the shareholder agreement. This restricts shareholders from engaging in business activities that may harm the close corporation or compete directly with its operations for a certain period of time. It's important to note that the specific terms and conditions of these agreements may vary depending on the shareholders' preferences, the nature of the close corporation, and the objectives of the shareholders involved. Seeking legal advice to tailor the agreement to the corporation's unique needs is highly recommended.

The Virginia Agreement of Shareholders of a Close Corporation with Management by Shareholders, often referred to as the Shareholders' Agreement, is a legally binding contract that outlines the rights, obligations, and commitments of shareholders who are actively involved in managing a close corporation. This agreement is specific to Virginia and is a valuable tool for shareholders to ensure a smooth operation of their business while protecting their interests and defining their roles clearly. Keywords: Virginia, Agreement of Shareholders, Close Corporation, Management by Shareholders, legally binding contract, rights, obligations, commitments, smooth operation, business, protecting interests, roles. Types of Virginia Agreement of Shareholders of a Close Corporation with Management by Shareholders: 1. Basic Shareholders' Agreement: This type of agreement covers the fundamental aspects of the relationship between shareholders who actively participate in the management of a close corporation. It outlines their respective ownership percentages, decision-making processes, and important provisions regarding buyouts, transfers of shares, and dispute resolution methods. 2. Minority Protection Shareholders' Agreement: This variation of the agreement is specifically designed to safeguard the interests of minority shareholders in a close corporation. It incorporates provisions to prevent unfair treatment, dilution of their ownership, or marginalization in decision-making processes. It may include veto rights, preemptive rights, or the appointment of an independent director to ensure fair representation. 3. Shareholders' Agreement with Profit-Sharing: In some close corporations, shareholders may agree to distribute profits among themselves based on a predetermined formula. This type of agreement outlines the profit-sharing arrangements, clarifies the methods of calculating and distributing profits, and establishes guidelines for re-investments or withholding profits for future business growth. 4. Buy-Sell Agreement: This agreement comes into play when a shareholder wants to sell their shares, or when certain predetermined events occur, such as the death, disability, retirement, or termination of a shareholder. It sets the terms and conditions for the buying and selling of shares, including the valuation method, payment terms, and any necessary restrictions. 5. Non-Compete Shareholders' Agreement: If shareholders have concerns about competition from one another or the potential misuse of confidential information, a non-compete agreement can be included in the shareholder agreement. This restricts shareholders from engaging in business activities that may harm the close corporation or compete directly with its operations for a certain period of time. It's important to note that the specific terms and conditions of these agreements may vary depending on the shareholders' preferences, the nature of the close corporation, and the objectives of the shareholders involved. Seeking legal advice to tailor the agreement to the corporation's unique needs is highly recommended.