Suffolk New York Buy-Sell Agreement between Two Shareholders of Closely Held Corporation

• Category: Corporations - Contracts
• State: Multi-State
• County: Suffolk
• Control #: US-02553BG
• Format: Word; 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 Suffolk New York Buy-Sell Agreement between Two Shareholders of a Closely Held Corporation is a legal document that outlines the terms and conditions for the purchase and sale of shares in a corporation. This agreement is essential for protecting the interests of both shareholders and maintaining the stability and continuity of the corporation. The Suffolk New York Buy-Sell Agreement includes several key elements that ensure a smooth transition of ownership and minimize conflicts between shareholders. It typically includes provisions for triggering events that may necessitate the sale of shares, such as death, disability, retirement, or voluntary withdrawal from the corporation. There are different types of Suffolk New York Buy-Sell Agreements that can be tailored to the particular needs and requirements of the shareholders and corporation. Some common types include: 1. Cross-Purchase Agreement: In this type of agreement, each shareholder agrees to purchase the shares of the other shareholder in the event of a triggering event. This allows the remaining shareholder(s) to maintain control and ownership in the corporation. 2. Stock Redemption Agreement: Under this agreement, the corporation itself agrees to repurchase the shares of the departing shareholder. The corporation uses its own funds or borrows money to fund the buyout. 3. Hybrid Agreement: A hybrid agreement combines elements of both cross-purchase and stock redemption agreements. In this case, the remaining shareholders have the option to purchase the shares, and if they decline, the corporation steps in to redeem the shares. The Suffolk New York Buy-Sell Agreement includes detailed provisions regarding the valuation of shares, payment terms, funding mechanisms, and restrictions on transferability. It may also include non-compete clauses to protect the corporation's interests and prevent shareholders from competing directly after leaving the company. It is important for shareholders to consult with legal professionals experienced in Suffolk County, New York, to ensure compliance with local laws and regulations. Drafting a comprehensive and well-defined Buy-Sell Agreement is crucial to safeguarding the interests of both parties and maintaining the stability and success of the closely held corporation.