Utah Agreement of Shareholders of a Close Corporation with Management by Shareholders

State:
Multi-State
Control #:
US-0178BG
Format:
Word; 
Rich Text
Instant download

Description

A close corporation is a corporation that is exempt from a number of the formal rules usually governing corporations, because of the small number of shareholders it has. The specifics vary by state, but usually a close corporation must not be publicly traded, and must have fewer than a set number of shareholders (usually 35 or so). A close corporation can generally be run directly by the shareholders (without a formal board of directors and without a formal annual meeting).
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FAQ

A shareholder agreement is an arrangement that defines the relationship between shareholders and the company. The agreement safeguards the rights and obligations of the majority and minority shareholders, and it ensures all shareholders are treated fairly.

A shareholders' agreement is no different from any other form of contract and so can become binding on shareholders because it has been agreed to by all of them either orally, in writing (but not formally signed) or by conduct.

A shareholders' agreement is an arrangement among a company's shareholders that describes how the company should be operated and outlines shareholders' rights and obligations. The shareholders' agreement is intended to make sure that shareholders are treated fairly and that their rights are protected.

A general shareholder agreement is an agreement between two or more shareholders which sets out additional rights and protections for the shareholders, including voting rights, restrictions on the transfer of shares and protection for minority shareholders.

Sometimes it is neither appropriate nor necessary for a shareholders' agreement to be signed by every shareholder. For instance, a shareholders' agreement may cover just voting rights and only need to be signed by members of the same family to ensure control is retained by one particular member of that family.

WHO SHOULD SIGN THE SHAREHOLDERS AGREEMENT? The shareholders agreement should be signed or executed by the company and each shareholder. Remember the legal requirements for a company and an individual to sign documents is different, so make sure that you review the execution blocks correctly and sign the right one!

What to Think about When You Begin Writing a Shareholder Agreement. ... Name Your Shareholders. ... Specify the Responsibilities of Shareholders. ... The Voting Rights of Your Shareholders. ... Decisions Your Corporation Might Face. ... Changing the Original Shareholder Agreement. ... Determine How Stock can be Sold or Transferred.

Shareholders could leave the company to set up a competing business. Investors in the business might be put off without a clear shareholders' agreement. Shareholders might not invest equally, or put as much effort into the business but receive the same returns.

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Utah Agreement of Shareholders of a Close Corporation with Management by Shareholders