Maryland 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.

A Maryland Shareholders' Agreement with Special Allocation of Dividends among Shareholders in a Close Corporation is a legally-binding document that outlines the rights and responsibilities of shareholders in a close corporation based in Maryland. This agreement is specifically designed to address the allocation of dividends among shareholders in a fair and equitable manner. The purpose of this agreement is to establish a framework for distributing profits among shareholders in a close corporation. It provides guidelines and mechanisms for determining the amount and timing of dividend payments, as well as the specific allocation method that will be followed. By having a clear and comprehensive agreement in place, shareholders can avoid disputes and confusion regarding dividend distributions. One type of Maryland Shareholders' Agreement with Special Allocation of Dividends among Shareholders in a Close Corporation is the Fixed Allocation Agreement. In this agreement, a predetermined percentage or fixed amount of dividends is allocated to each shareholder. This type of allocation ensures a consistent distribution based on agreed-upon terms. Another type is the Proportional Allocation Agreement. This agreement allocates dividends proportionally to each shareholder's ownership percentage in the corporation. It is based on the principle of proportional distribution, where shareholders receive dividends in line with their ownership stake. Furthermore, there is the Priority Allocation Agreement. Under this agreement, certain shareholders are given priority in receiving dividend payments over others. This can be based on various criteria such as seniority, investment amount, or specific contributions made to the corporation. Shareholders with priority may receive dividends before others or receive a higher allocation percentage. In addition to dividend allocation, a Maryland Shareholders' Agreement with Special Allocation of Dividends among Shareholders in a Close Corporation may also cover other essential provisions. These provisions can include decision-making processes, restrictions on share transfers, dispute resolution mechanisms, and the roles and responsibilities of shareholders and officers. It is crucial for shareholders in a close corporation to have a well-drafted agreement in place, customized to meet their specific needs and circumstances. Seeking the guidance of a qualified attorney familiar with Maryland corporate law while drafting or reviewing this agreement is highly recommended ensuring legal compliance and protection of shareholder interests. In summary, a Maryland Shareholders' Agreement with Special Allocation of Dividends among Shareholders in a Close Corporation establishes a clear framework for dividend distribution in a close corporation. Different types of agreements, such as Fixed Allocation, Proportional Allocation, and Priority Allocation, provide various methods for allocating dividends among shareholders. Having a comprehensive agreement in place helps prevent disputes and ensures fair and equitable distribution of profits.