Wyoming 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. A Wyoming Buy-Sell Agreement between Shareholders of a Closely Held Corporation is a legally binding contract that outlines the terms and conditions for the buying and selling of shares in a closely held corporation based in the state of Wyoming. This agreement is designed to protect the interests of the shareholders and ensure a smooth transition of ownership within the corporation. In Wyoming, there are several types of Buy-Sell Agreements that shareholders can consider, including: 1. Cross-Purchase Agreement: This type of agreement allows individual shareholders of the closely held corporation to purchase shares from each other in the event of a triggering event, such as death, disability, retirement, or voluntary departure. 2. Redemption Agreement: This agreement stipulates that the corporation itself will buy back the shares of a departing shareholder, usually triggered by death, disability, retirement, or termination of employment. 3. Hybrid Agreement: A hybrid agreement combines elements of both the cross-purchase and redemption agreements. In this case, some shareholders may have the option to buy the shares of a departing shareholder, while the corporation itself has the option to redeem the shares. The Wyoming Buy-Sell Agreement typically includes the following key components: 1. Triggering Events: The agreement specifies the events that can trigger the buying and selling of shares, such as death, disability, retirement, bankruptcy, divorce, or voluntary departure from the corporation. 2. Valuation Methodology: It outlines the process for determining the value of the shares, including the use of appraisers or predetermined formulae based on the financial performance of the corporation. 3. Purchase Price and Payment Terms: The agreement establishes the price at which shares will be bought and sold, and the terms of payment, such as cash, installment payments, or using a sinking fund. 4. Funding Mechanisms: The agreement addresses how the purchasing of shares will be funded, which can include cash reserves, insurance policies, corporate loans, or installment payments. 5. Restrictions on Transfer: This clause prevents shareholders from selling their shares to outside parties without first offering them to the corporation or other shareholders, ensuring that ownership remains within the closely held corporation. 6. Right of First Refusal: This provision grants existing shareholders the first opportunity to purchase the shares of a departing shareholder before they can be sold to a third party. 7. Dispute Resolution: The agreement may include provisions for resolving disputes, such as mediation or arbitration, to avoid costly litigation between shareholders. A Wyoming Buy-Sell Agreement between Shareholders of a Closely Held Corporation is a crucial document that protects the rights and interests of shareholders, ensures a smooth transition of ownership, and provides a clear framework for the buying and selling of shares within a closely held corporation in the state of Wyoming.

A Wyoming Buy-Sell Agreement between Shareholders of a Closely Held Corporation is a legally binding contract that outlines the terms and conditions for the buying and selling of shares in a closely held corporation based in the state of Wyoming. This agreement is designed to protect the interests of the shareholders and ensure a smooth transition of ownership within the corporation. In Wyoming, there are several types of Buy-Sell Agreements that shareholders can consider, including: 1. Cross-Purchase Agreement: This type of agreement allows individual shareholders of the closely held corporation to purchase shares from each other in the event of a triggering event, such as death, disability, retirement, or voluntary departure. 2. Redemption Agreement: This agreement stipulates that the corporation itself will buy back the shares of a departing shareholder, usually triggered by death, disability, retirement, or termination of employment. 3. Hybrid Agreement: A hybrid agreement combines elements of both the cross-purchase and redemption agreements. In this case, some shareholders may have the option to buy the shares of a departing shareholder, while the corporation itself has the option to redeem the shares. The Wyoming Buy-Sell Agreement typically includes the following key components: 1. Triggering Events: The agreement specifies the events that can trigger the buying and selling of shares, such as death, disability, retirement, bankruptcy, divorce, or voluntary departure from the corporation. 2. Valuation Methodology: It outlines the process for determining the value of the shares, including the use of appraisers or predetermined formulae based on the financial performance of the corporation. 3. Purchase Price and Payment Terms: The agreement establishes the price at which shares will be bought and sold, and the terms of payment, such as cash, installment payments, or using a sinking fund. 4. Funding Mechanisms: The agreement addresses how the purchasing of shares will be funded, which can include cash reserves, insurance policies, corporate loans, or installment payments. 5. Restrictions on Transfer: This clause prevents shareholders from selling their shares to outside parties without first offering them to the corporation or other shareholders, ensuring that ownership remains within the closely held corporation. 6. Right of First Refusal: This provision grants existing shareholders the first opportunity to purchase the shares of a departing shareholder before they can be sold to a third party. 7. Dispute Resolution: The agreement may include provisions for resolving disputes, such as mediation or arbitration, to avoid costly litigation between shareholders. A Wyoming Buy-Sell Agreement between Shareholders of a Closely Held Corporation is a crucial document that protects the rights and interests of shareholders, ensures a smooth transition of ownership, and provides a clear framework for the buying and selling of shares within a closely held corporation in the state of Wyoming.