This office lease provision states that it is an unpermitted assignment for partners to have a change in their share of partnership ownership and thus a default under the lease. Generally, this type of change in ownership is couched in those provisions dealing with changes in share ownerships of corporations.
Chicago, Illinois Provision Dealing with Changes in Share Ownership of Corporations and Changes in Share Ownership of Partnership In Chicago, Illinois, there are specific provisions that govern the changes in share ownership of both corporations and partnerships. These provisions ensure a smooth transition of ownership, protect the rights of existing shareholders or partners, and maintain the integrity of the business entity. Let's explore the details of these provisions. Changes in Share Ownership of Corporations: 1. Stock Transfer Restrictions: Corporations may have specific provisions in their bylaws that impose restrictions on the transfer of shares. These restrictions can include preemption rights, which give existing shareholders the first opportunity to purchase additional shares before they are sold to outsiders. 2. Shareholder Approval: Significant changes in share ownership, such as a merger or acquisition, typically require the approval of the shareholders. Majority or super majority votes may be necessary, depending on the magnitude of the change. 3. Securities Laws Compliance: Chicago, Illinois, like other jurisdictions, has securities laws in place to protect investors. Any change in share ownership that falls under these laws must comply with the relevant regulations, such as filing necessary forms with the Securities and Exchange Commission (SEC). Changes in Share Ownership of Partnerships: 1. Partnership Agreement: Partnerships are often governed by written partnership agreements. These agreements typically outline the rights and obligations of partners and may contain provisions related to the transfer of partnership interests. 2. Consent of Existing Partners: Changes in share ownership of partnerships often require the consent of existing partners. This consent can be obtained through a vote or agreement among partners regarding the admission or withdrawal of new partners. 3. Dissolution and Reformation: In some cases, significant changes in share ownership or partnership composition may lead to the dissolution of the existing partnership. The partners may then choose to re-form the partnership under a new agreement. Different Types of Provisions: 1. Drag-Along Rights: These provisions allow a majority shareholder or partner to force minority shareholders or partners to sell their shares or partnership interests in the event of certain transactions, such as a sale of the business. This provision ensures a unified decision on selling the entity and avoids any holdouts. 2. Tag-Along Rights: Conversely, tag-along rights protect minority shareholders or partners by allowing them to join in a transaction being pursued by the majority shareholders or partners. This provision ensures that minority interests are not left behind in major ownership changes. 3. Stock Buybacks: Corporations may have provisions that allow them to repurchase their own shares from shareholders under certain circumstances. This provision gives the corporation flexibility in managing ownership changes and can be useful in situations such as retiring a departing shareholder's or partner's ownership stake. In conclusion, the Chicago, Illinois provision dealing with changes in share ownership of corporations and changes in share ownership of partnerships consists of various regulations and provisions aimed at protecting the rights of existing shareholders or partners, ensuring a smooth transition of ownership, and complying with relevant securities laws. Specific provisions such as stock transfer restrictions, shareholder or partner approval, and consent requirements, along with mechanisms like drag-along and tag-along rights, contribute to maintaining the integrity of these business entities. It is essential for both corporations and partnerships to have comprehensive agreements in place that address ownership changes and provide mechanisms for a fair and transparent process.
