Tennessee 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 Tennessee Shareholders' Agreement with Special Allocation of Dividends among Shareholders in a Close Corporation is a legally binding document that outlines the terms and conditions regarding the distribution of dividends among shareholders in a close corporation specifically in Tennessee. In a close corporation, the shareholders are usually a small group of individuals who have a significant influence on the decision-making process and overall operations of the corporation. The Shareholders' Agreement ensures that the distribution of dividends is fair and transparent while considering the specific needs and preferences of the shareholders involved. This agreement typically includes provisions that dictate how the dividends will be allocated among the shareholders. It may outline a formula or a specific percentage that each shareholder will receive based on their ownership percentage or other predetermined criteria. The objective is to ensure that each shareholder receives a fair share of the dividends based on their contributions to the corporation. Furthermore, a Tennessee Shareholders' Agreement with Special Allocation of Dividends among Shareholders in a Close Corporation may also address several other important matters. These may include: 1. Decision-Making: The agreement may outline the decision-making process within the close corporation. It can specify whether certain decisions require unanimous consent, a majority vote, or a specific percentage of shareholder approval. 2. Buy-Sell Agreement: The agreement may include provisions related to buy-sell agreements, which outline how shares can be bought or sold between shareholders in case of particular events such as death, disability, retirement, or voluntary withdrawal. 3. Transfer Restrictions: It may establish restrictions on the transfer of shares to parties outside the close corporation. These restrictions can help maintain the close-knit nature of the corporation and prevent unwanted individuals from becoming shareholders without the consent of existing shareholders. 4. Board of Directors: The agreement can define the structure and composition of the board of directors, including the appointment process and decision-making authority. 5. Dispute Resolution: It may include provisions for resolving disputes between shareholders, such as through mediation, arbitration, or other agreed-upon methods, to avoid costly and time-consuming litigation. Different types or variations of Tennessee Shareholders' Agreement with Special Allocation of Dividends among Shareholders in a Close Corporation may exist, tailored to the specific needs of the corporation and its shareholders. However, the fundamental purpose of these agreements remains the same — to define the rules and regulations governing the distribution of dividends and other important matters within the close corporation, ensuring fairness and harmony among the shareholders.