Phoenix Arizona Buy-Sell Agreement between Shareholders of Closely Held Corporation

• Category: Corporations - Buy Sell
• State: Multi-State
• City: Phoenix
• 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 Phoenix Arizona 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 located in Phoenix, Arizona. This agreement protects the interests of shareholders and ensures a smooth transition of ownership in case of certain predefined events such as death, disability, retirement, or dispute. This type of agreement is crucial for closely held corporations as it helps prevent potential conflicts among shareholders and offers a fair and predetermined mechanism for the purchase and sale of shares. Here are some types of Buy-Sell Agreements commonly used in Phoenix, Arizona: 1. Cross-Purchase Agreement: In a cross-purchase agreement, the remaining shareholders have the first right to purchase the shares of a shareholder who leaves the corporation due to the aforementioned events. Each shareholder agrees to buy the departing shareholder's shares in proportion to their ownership percentage. This type of agreement avoids dilution of ownership and keeps control within the current shareholder base. 2. Entity-Purchase Agreement: In an entity-purchase agreement, the corporation itself agrees to purchase the departing shareholder's shares. The corporation then becomes the sole owner of those shares. This type of agreement may be beneficial when there are many shareholders, and it simplifies the process by allowing the corporation to buy back the shares. 3. Wait-and-See Agreement: A wait-and-see agreement combines elements of both the cross-purchase and entity-purchase agreements. It allows the remaining shareholders and the corporation to decide who will purchase the departing shareholder's shares based on the specific circumstances at the time of the triggering event. This flexibility ensures an optimal outcome for everyone involved. 4. Redemption Agreement: A redemption agreement involves the corporation redeeming the shares of a departing shareholder, usually funded by the corporation's assets or through insurance policies. This type of agreement can help provide liquidity for shareholders without relying on the purchasing power of the remaining shareholders. 5. Hybrid Agreement: A hybrid agreement is a customized blend of different types of buy-sell agreements that meet the specific needs and circumstances of the closely held corporation and its shareholders. It incorporates various provisions and structures to address specific concerns and objectives. In conclusion, a Phoenix Arizona Buy-Sell Agreement between Shareholders of a Closely Held Corporation is a crucial legal document that ensures the smooth transfer of ownership in a closely held corporation. By using different types of buy-sell agreements discussed above, shareholders can protect their interests, maintain control, and facilitate a fair transition of ownership in the event of predetermined triggering events.

A Phoenix Arizona 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 located in Phoenix, Arizona. This agreement protects the interests of shareholders and ensures a smooth transition of ownership in case of certain predefined events such as death, disability, retirement, or dispute. This type of agreement is crucial for closely held corporations as it helps prevent potential conflicts among shareholders and offers a fair and predetermined mechanism for the purchase and sale of shares. Here are some types of Buy-Sell Agreements commonly used in Phoenix, Arizona: 1. Cross-Purchase Agreement: In a cross-purchase agreement, the remaining shareholders have the first right to purchase the shares of a shareholder who leaves the corporation due to the aforementioned events. Each shareholder agrees to buy the departing shareholder's shares in proportion to their ownership percentage. This type of agreement avoids dilution of ownership and keeps control within the current shareholder base. 2. Entity-Purchase Agreement: In an entity-purchase agreement, the corporation itself agrees to purchase the departing shareholder's shares. The corporation then becomes the sole owner of those shares. This type of agreement may be beneficial when there are many shareholders, and it simplifies the process by allowing the corporation to buy back the shares. 3. Wait-and-See Agreement: A wait-and-see agreement combines elements of both the cross-purchase and entity-purchase agreements. It allows the remaining shareholders and the corporation to decide who will purchase the departing shareholder's shares based on the specific circumstances at the time of the triggering event. This flexibility ensures an optimal outcome for everyone involved. 4. Redemption Agreement: A redemption agreement involves the corporation redeeming the shares of a departing shareholder, usually funded by the corporation's assets or through insurance policies. This type of agreement can help provide liquidity for shareholders without relying on the purchasing power of the remaining shareholders. 5. Hybrid Agreement: A hybrid agreement is a customized blend of different types of buy-sell agreements that meet the specific needs and circumstances of the closely held corporation and its shareholders. It incorporates various provisions and structures to address specific concerns and objectives. In conclusion, a Phoenix Arizona Buy-Sell Agreement between Shareholders of a Closely Held Corporation is a crucial legal document that ensures the smooth transfer of ownership in a closely held corporation. By using different types of buy-sell agreements discussed above, shareholders can protect their interests, maintain control, and facilitate a fair transition of ownership in the event of predetermined triggering events.