Mississippi 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 Mississippi Shareholders' Agreement with Special Allocation of Dividends among Shareholders in a Close Corporation refers to a legally binding document that outlines the terms and conditions related to the distribution of dividends among shareholders in a close corporation based in the state of Mississippi. This agreement is crucial for governing the allocation of profits generated by the corporation and ensuring fairness and transparency among shareholders. In a close corporation, which is typically a privately-held company with a limited number of shareholders, it is common for the shareholders to have more flexibility in determining how profits are distributed. This is where the Shareholders' Agreement with Special Allocation of Dividends comes into play. The agreement outlines the various types of special allocations of dividends that can be made to shareholders. These special allocations are designed to provide certain shareholders with a larger portion of the profits based on specific criteria, such as their contribution to the corporation, ownership interest, or other performance factors. The types of special allocations that can be addressed in this agreement include: 1. Performance-based allocation: This type of allocation involves providing a larger share of dividends to shareholders who have contributed significantly to the success of the corporation, such as key executives or employees with a unique skill set or expertise. 2. Capital contribution allocation: In this type of allocation, shareholders who have made substantial financial investments in the corporation are entitled to a larger share of the dividends. 3. Ownership interest allocation: This allocation is based on the ownership percentage of each shareholder. Shareholders with a higher ownership interest are entitled to a larger proportion of the dividends. 4. Time-based allocation: This allocation is based on the duration of a shareholder's ownership in the corporation. Shareholders who have held their shares for a longer period may receive a higher allocation of dividends. The Mississippi Shareholders' Agreement with Special Allocation of Dividends also covers other important aspects related to dividend distribution, such as the calculation method, frequency of dividend payments, and any restrictions or conditions that may apply. Overall, this agreement is designed to provide clarity and fairness in distributing dividends among shareholders in a close corporation. By outlining specific criteria for special allocations, it helps establish a structure that aligns with the shareholders' agreement and the corporation's objectives. To ensure the legality and enforceability of the agreement, it is important to consult with legal professionals familiar with Mississippi corporate law and shareholder agreements. They can guide shareholders in drafting a customized agreement that meets their specific needs while complying with relevant legal requirements.