Shareholders' Agreement between Two Shareholders of Closely Held Corporation with Buy Sell Provisions
What is this form?
This Shareholders' Agreement between Two Shareholders of a Closely Held Corporation with Buy-Sell Provisions is a legal document that outlines the rights, responsibilities, and obligations of the shareholders in a closely held corporation. It establishes guidelines for the transfer and ownership of shares, including conditions under which shares can be sold or transferred. This form is essential for maintaining control and clarity among the shareholders, preventing disputes, and ensuring a smooth transition in ownership. Unlike standard corporate bylaws, this agreement has specific provisions tailored for closely held corporations and includes buy-sell terms to protect the interests of both shareholders.
Form components explained
- Definitions of key terms such as "Closing" and "Sale Date."
- Issuance and transfer regulations for shares owned by shareholders.
- Guidelines for stock certificate legends indicating the agreement's existence.
- Procedures for selling shares during a shareholder's lifetime.
- Provisions detailing the transfer of shares upon a shareholder's death.
- Noncompetition clauses applicable in case of sale by a shareholder.
- Severability and no waiver clauses to maintain the validity of the agreement.
- Governing law and dispute resolution through mandatory arbitration.
Situations where this form applies
This form should be used when establishing a formal agreement between two shareholders of a closely held corporation. It is essential for scenarios such as planning for the eventual sale of shares, managing ownership transitions due to death or disability, and preventing outside parties from obtaining shares without the approval of existing shareholders. If you run a family business or a small company with limited owners, this agreement can help clarify expectations and protect each shareholder's interests.
Intended users of this form
- Shareholders of a closely held corporation seeking to establish clear agreements on share ownership and transfer.
- Business partners intending to set guidelines for future changes in ownership.
- Small business owners looking for a structured approach to manage stock transitions.
- Individuals forming family-owned corporations needing to outline the roles of shareholders.
How to prepare this document
- Identify and enter the date of the agreement at the beginning.
- Fill in the names of the corporation and the shareholders involved.
- Specify the number of shares authorized and issued by the corporation.
- Follow the clauses to detail the terms of ownership and transfer of shares as agreed by both parties.
- Each shareholder must sign the agreement, including printed names and titles, if applicable.
- Ensure all parties receive a copy of the signed agreement for their records.
Does this form need to be notarized?
In most cases, this form does not require notarization. However, some jurisdictions or signing circumstances might. US Legal Forms offers online notarization powered by Notarize, accessible 24/7 for a quick, remote process.
Common mistakes to avoid
- Failing to include specific buy-sell provisions tailored to the corporation's needs.
- Not updating the agreement when shareholder roles or numbers change.
- Neglecting to review state-specific regulations which may affect the validity of the form.
- Forgetting to include signatures of all shareholders involved.
Advantages of online completion
- Convenience of downloading and filling out the form at your leisure.
- Editability allows you to customize the agreement to fit your specific needs.
- Access to templates drafted by licensed attorneys, ensuring reliability.
State-specific requirements
This is a general template intended for use in various states. Laws and formatting rules differ, so confirm the document meets your state’s requirements before using it.
Form popularity
FAQ
A buy and sell agreement is a legally binding contract that stipulates how a partner's share of a business may be reassigned if that partner dies or otherwise leaves the business.The buy and sell agreement is also known as a buy-sell agreement, a buyout agreement, a business will, or a business prenup.
Identity of the Parties/Date of Agreement. The first topic a sales contract should address is the identity of the parties. Description of Goods and/or Services. A sales contract should also address what is being bought or sold. Payment. Delivery. Miscellaneous Provisions. Samples.
A buy-sell agreement consists of three common elements: a triggering event, a valuation method and a funding strategy.
A buy and sell agreement is a legally binding contract that stipulates how a partner's share of a business may be reassigned if that partner dies or otherwise leaves the business.The buy and sell agreement is also known as a buy-sell agreement, a buyout agreement, a business will, or a business prenup.
Most Common Uses of a Buy-Sell Agreement The buyout agreement stipulates what types of events trigger the contract. Each agreement is laid out to best meet the needs of each particular company. It can include specifications about who can buy stocks and the type of life situation that would trigger a buyout.
Introduction. Step 1: Decide on the issues the agreement should cover. Step 2: Identify the interests of shareholders. Step 3: Identify shareholder value. Step 4: Identify who will make decisions - shareholders or directors. Step 5: Decide how voting power of shareholders should add up. Further information and documents.
Most Common Uses of a Buy-Sell Agreement The buyout agreement stipulates what types of events trigger the contract. Each agreement is laid out to best meet the needs of each particular company. It can include specifications about who can buy stocks and the type of life situation that would trigger a buyout.
Depending on your situation, plans and the number of partners, the cost of drafting a buy-sell agreement can vary. When you hire a lawyer in the Priori network, drafting a buy-sell agreement typically costs anywhere from $1000-$5000.
Agreed value. You can set a value in the buy-sell agreement. Book value. Multiple of book value. Appraised value.
