Indiana Shareholders' Agreement with Special Allocation of Dividends among Shareholders in a Close Corporation

• Category: Corporations - Shareholders and Stock
• State: Multi-State
• Control #: US-1085BG
• 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. A shareholders' agreement may contain provisions relating to any phase of the affairs of a close corporation. Statutes often provide that the agreement may, as between the parties to the agreement, alter or waive the provisions of the general corporation law except those provisions that are specifically exempt from such alteration or waiver. A shareholders' agreement may not be altered or terminated except as provided by the agreement, or by all the parties, or by operation of law.

Indiana Shareholders' Agreement with Special Allocation of Dividends among Shareholders in a Close Corporation is a legally binding document that outlines the terms and conditions related to the distribution of profits and dividends among shareholders in a close corporation based in the state of Indiana. In a close corporation, which is a privately-held company with a limited number of shareholders, this agreement helps establish a fair and equitable system for sharing company profits. By incorporating specific provisions for the allocation of dividends, it ensures transparency and avoids potential conflicts among shareholders. Key provisions in the Indiana Shareholders' Agreement with Special Allocation of Dividends may include but are not limited to: 1. Method of Allocation: The agreement specifies the method for distributing dividends among shareholders, whether it is proportional to their share ownership or based on other predetermined criteria. 2. Special Allocation: This provision allows for a specific portion of the dividends to be allocated differently than the regular allocation. For example, shareholders who hold certain classes of shares can receive a higher share of dividends compared to others. 3. Eligibility and Timing: The agreement may outline eligibility criteria for receiving dividends, such as the requirement for active shareholder participation or the achievement of certain financial targets. It also clarifies the frequency of dividend distribution. 4. Restrictions and Limitations: To protect the interests of all shareholders, the agreement may impose restrictions on the amount of dividends that can be allocated through special provisions. This prevents unfair advantages or harm to the company's financial stability. 5. Dispute Resolution: In cases where disputes arise regarding dividend allocation, the agreement may provide guidelines for resolution, such as mandatory arbitration or alternative dispute resolution methods. 6. Amendment and Termination: The agreement should include provisions allowing for amendments or termination with the consent of all shareholders. This ensures flexibility and adaptability to potential changes in the company's objectives or shareholder structure. Different types of Indiana Shareholders' Agreement with Special Allocation of Dividends may include: 1. Class-Based Allocation Agreement: This agreement defines the special allocation of dividends based on different classes of shares. It outlines the specific criteria for each class and the respective dividends they are entitled to. 2. Performance-Based Allocation Agreement: This type of agreement establishes a special allocation of dividends based on predetermined performance targets and criteria. Shareholders who contribute significantly to the company's success or achieve specific milestones can receive a higher portion of dividends. 3. Discretionary Allocation Agreement: In certain cases, shareholders may agree to a discretionary allocation of dividends, giving the company's management or board the discretion to allocate dividends based on various factors. This agreement provides flexibility in dividend distribution while maintaining fairness and shareholder consent. It is crucial for shareholders in an Indiana close corporation to carefully draft and review the Shareholders' Agreement with Special Allocation of Dividends to ensure clarity, fairness, and protection of their rights and interests. Seeking professional legal advice is recommended to navigate the complexities of drafting such an agreement in compliance with Indiana state laws.