Rhode Island 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.

Rhode Island Shareholders' Agreement with Special Allocation of Dividends among Shareholders in a Close Corporation is a legal contract designed to outline the specific terms and conditions governing the distribution of dividends in a closely-held corporation in Rhode Island. This agreement is intended to establish a fair and transparent framework for allocating dividends among shareholders based on certain predetermined criteria. In a closely-held corporation, where there is a limited number of shareholders, it is common to have a specific agreement in place that governs the distribution of dividends. This agreement helps prevent disputes and ensures that shareholders are treated equitably when it comes to receiving their share of the company's profits. The Rhode Island Shareholders' Agreement with Special Allocation of Dividends among Shareholders in a Close Corporation typically includes various provisions, including but not limited to: 1. Dividend Allocation Formula: This section outlines the formula for calculating how dividends will be distributed among shareholders. Typically, the formula takes into account the percentage of ownership each shareholder holds in the company. 2. Allocation Priorities: The agreement may establish priorities for dividend allocation, such as ensuring that certain shareholders receive a minimum amount or a specific percentage of dividends before others are entitled to a share. 3. Conditions and Restrictions: The agreement may outline conditions under which dividends can be distributed, such as the company achieving a certain level of profitability or meeting specific financial targets. 4. Preferred Dividends: In some cases, certain shareholders, such as preferred shareholders, may have the right to receive dividends before common shareholders. The agreement may specify the terms and conditions for these preferred dividends. 5. Dividend Payment Schedule: This section defines the frequency and timing of dividend payments, whether they are distributed on a quarterly, semi-annual, or annual basis. It may also outline penalties or interest charges for late or missed dividend payments. 6. Dispute Resolution: The agreement may include mechanisms for resolving disputes related to dividend allocation, such as mediation or arbitration procedures to avoid costly litigation. Some specific types of Rhode Island Shareholders' Agreement with Special Allocation of Dividends among Shareholders in a Close Corporation are: 1. Equal Shareholders' Agreement: In this type of agreement, dividends are distributed equally among all shareholders, regardless of their percentage of ownership in the company. 2. Proportional Shareholders' Agreement: This agreement allocates dividends based on the proportion of ownership each shareholder holds. Shareholders receive dividends in direct proportion to their ownership percentage. 3. Preferred Shareholders' Agreement: This agreement gives preference to certain shareholders, typically those with preferred shares, when it comes to dividend distribution. Preferred shareholders receive their dividends before common shareholders. In conclusion, a Rhode Island Shareholders' Agreement with Special Allocation of Dividends among Shareholders in a Close Corporation is a crucial legal document that helps establish clear guidelines for distributing dividends among shareholders in a closely-held corporation. These agreements aim to promote fairness, transparency, and prevent conflicts over dividend distributions.