Santa Clara 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: Santa Clara
• 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. Santa Clara California Shareholders' Agreement with Buy-Sell Agreement is a legally binding document that outlines the rights and obligations of shareholders in a corporation, particularly in the event of a shareholder's death. This agreement includes a provision that grants the corporation the first right of refusal to purchase the shares owned by the deceased shareholder, should the beneficiaries of the deceased shareholder express their desire to sell those shares. The purpose of such an agreement is to provide a mechanism for the smooth transition of ownership and control within the corporation, while ensuring the interests of the deceased shareholder's beneficiaries are protected. This agreement helps safeguard the corporation from potential disruption or unwanted parties becoming shareholders. There may be different types of Santa Clara California Shareholders' Agreement with Buy-Sell Agreement, depending on the specific needs and preferences of the corporation and its shareholders. Here are a few common variations: 1. Fixed Price Agreement: This type of agreement sets a predetermined fixed price at which the corporation will purchase the shares of the deceased shareholder. The beneficiaries must offer the shares to the corporation at this predetermined price before seeking alternative buyers. 2. Formula Price Agreement: This type of agreement employs a predetermined formula, usually based on a specific financial metric such as earnings or book value, to determine the price at which the corporation will buy the shares from the deceased shareholder's beneficiaries. The formula provides an objective and consistent valuation method. 3. Appraisal Price Agreement: In this type of agreement, an independent appraiser is appointed to determine the fair market value of the shares of the deceased shareholder. The corporation then has the first right of refusal to purchase the shares at the appraised value before other potential buyers. Regardless of the specific type, the underlying purpose of a Santa Clara California Shareholders' Agreement with Buy-Sell Agreement is to ensure a smooth and controlled transfer of ownership, avoiding any potential disputes or disruptions. By granting the corporation the first right of refusal, the agreement enables the corporation to maintain its structure and continuity, while allowing the beneficiaries of the deceased shareholder to realize the fair value of the shares if they desire to sell.

Santa Clara California Shareholders' Agreement with Buy-Sell Agreement is a legally binding document that outlines the rights and obligations of shareholders in a corporation, particularly in the event of a shareholder's death. This agreement includes a provision that grants the corporation the first right of refusal to purchase the shares owned by the deceased shareholder, should the beneficiaries of the deceased shareholder express their desire to sell those shares. The purpose of such an agreement is to provide a mechanism for the smooth transition of ownership and control within the corporation, while ensuring the interests of the deceased shareholder's beneficiaries are protected. This agreement helps safeguard the corporation from potential disruption or unwanted parties becoming shareholders. There may be different types of Santa Clara California Shareholders' Agreement with Buy-Sell Agreement, depending on the specific needs and preferences of the corporation and its shareholders. Here are a few common variations: 1. Fixed Price Agreement: This type of agreement sets a predetermined fixed price at which the corporation will purchase the shares of the deceased shareholder. The beneficiaries must offer the shares to the corporation at this predetermined price before seeking alternative buyers. 2. Formula Price Agreement: This type of agreement employs a predetermined formula, usually based on a specific financial metric such as earnings or book value, to determine the price at which the corporation will buy the shares from the deceased shareholder's beneficiaries. The formula provides an objective and consistent valuation method. 3. Appraisal Price Agreement: In this type of agreement, an independent appraiser is appointed to determine the fair market value of the shares of the deceased shareholder. The corporation then has the first right of refusal to purchase the shares at the appraised value before other potential buyers. Regardless of the specific type, the underlying purpose of a Santa Clara California Shareholders' Agreement with Buy-Sell Agreement is to ensure a smooth and controlled transfer of ownership, avoiding any potential disputes or disruptions. By granting the corporation the first right of refusal, the agreement enables the corporation to maintain its structure and continuity, while allowing the beneficiaries of the deceased shareholder to realize the fair value of the shares if they desire to sell.