Los Angeles California Shareholders' Agreement with Buy-Sell Agreement Allowing Corporation the First Right of Refusal to Purchase the Shares of Deceased Shareholder should the Beneficiaries of the Deceased Shareholder Desire to Sell such Shares

• Category: Corporations - Shareholders and Stock
• State: Multi-State
• County: Los Angeles
• Control #: US-02629BG
• 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. This form is a generic example that may be referred to when preparing such a form for your particular state. It is for illustrative purposes only. Local laws should be consulted to determine any specific requirements for such a form in a particular jurisdiction. A Los Angeles California Shareholders' Agreement with a Buy-Sell Agreement Allowing Corporation the First Right of Refusal to Purchase the Shares of a Deceased Shareholder serves as a legal document outlining the terms and conditions governing the transfer of shares in a corporation upon the death of a shareholder. This agreement provides a mechanism for the corporation to have the first option to purchase the shares should the beneficiaries of the deceased shareholder express their intention to sell them. The primary purpose of this agreement is to maintain control and stability within the corporation by ensuring that the shares of a deceased shareholder remain within the company or are acquired by the corporation rather than being sold to an external party. By granting the corporation the first right of refusal, this agreement safeguards the interests of the corporation and its shareholders. Key provisions typically included in a Los Angeles California Shareholders' Agreement with a Buy-Sell Agreement Allowing Corporation the First Right of Refusal are: 1. First Right of Refusal: This clause grants the corporation the first opportunity to purchase the shares of a deceased shareholder. If the beneficiaries of the deceased shareholder wish to sell the shares, they must notify the corporation in writing, providing details of the proposed sale, including the price and terms. 2. Purchase Price: The agreement should outline how the purchase price will be determined. It may be based on a pre-agreed formula, the fair market value, or an independent valuation. 3. Purchase Process: The agreement should specify the steps to be followed in the purchase process, including the time frame within which the corporation must respond to the offer. This ensures a transparent and efficient process for both parties involved. 4. Funding Mechanism: The agreement can detail how the corporation will fund the purchase of the shares, whether through available cash, borrowing, or an installment payment plan. 5. Protection of Minority Shareholders: To protect the interests of minority shareholders, the agreement may include provisions such as tag-along rights or drag-along rights. Tag-along rights allow minority shareholders to participate in the sale of shares on the same terms and conditions as the majority shareholder. Drag-along rights enable majority shareholders to force minority shareholders to sell their shares when a specific percentage of shares are being sold to a third party. It is important to note that the specific type or name of Los Angeles California Shareholders' Agreement with a Buy-Sell Agreement Allowing Corporation the First Right of Refusal can vary depending on the drafting preferences and legal requirements of the parties involved. Different corporations may have their own variations and modifications to suit their unique circumstances. It is advisable to consult a legal professional well-versed in corporate law to draft or review such agreements to ensure compliance with applicable laws and protection of shareholder rights.

A Los Angeles California Shareholders' Agreement with a Buy-Sell Agreement Allowing Corporation the First Right of Refusal to Purchase the Shares of a Deceased Shareholder serves as a legal document outlining the terms and conditions governing the transfer of shares in a corporation upon the death of a shareholder. This agreement provides a mechanism for the corporation to have the first option to purchase the shares should the beneficiaries of the deceased shareholder express their intention to sell them. The primary purpose of this agreement is to maintain control and stability within the corporation by ensuring that the shares of a deceased shareholder remain within the company or are acquired by the corporation rather than being sold to an external party. By granting the corporation the first right of refusal, this agreement safeguards the interests of the corporation and its shareholders. Key provisions typically included in a Los Angeles California Shareholders' Agreement with a Buy-Sell Agreement Allowing Corporation the First Right of Refusal are: 1. First Right of Refusal: This clause grants the corporation the first opportunity to purchase the shares of a deceased shareholder. If the beneficiaries of the deceased shareholder wish to sell the shares, they must notify the corporation in writing, providing details of the proposed sale, including the price and terms. 2. Purchase Price: The agreement should outline how the purchase price will be determined. It may be based on a pre-agreed formula, the fair market value, or an independent valuation. 3. Purchase Process: The agreement should specify the steps to be followed in the purchase process, including the time frame within which the corporation must respond to the offer. This ensures a transparent and efficient process for both parties involved. 4. Funding Mechanism: The agreement can detail how the corporation will fund the purchase of the shares, whether through available cash, borrowing, or an installment payment plan. 5. Protection of Minority Shareholders: To protect the interests of minority shareholders, the agreement may include provisions such as tag-along rights or drag-along rights. Tag-along rights allow minority shareholders to participate in the sale of shares on the same terms and conditions as the majority shareholder. Drag-along rights enable majority shareholders to force minority shareholders to sell their shares when a specific percentage of shares are being sold to a third party. It is important to note that the specific type or name of Los Angeles California Shareholders' Agreement with a Buy-Sell Agreement Allowing Corporation the First Right of Refusal can vary depending on the drafting preferences and legal requirements of the parties involved. Different corporations may have their own variations and modifications to suit their unique circumstances. It is advisable to consult a legal professional well-versed in corporate law to draft or review such agreements to ensure compliance with applicable laws and protection of shareholder rights.