Virginia 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 Virginia Shareholders' Agreement with Special Allocation of Dividends among Shareholders in a Close Corporation is a legally binding document that outlines the rules and regulations regarding the distribution of dividends among shareholders in a close corporation based in the state of Virginia. It provides a framework for how profits will be allocated and distributed to shareholders, taking into consideration their individual ownership percentages and any special arrangements that may exist. This agreement is particularly important for close corporations, which are privately held companies with a limited number of shareholders, as it ensures fairness and transparency in dividend distribution. It helps prevent disputes and misunderstandings among shareholders by clearly defining the rules and procedures surrounding dividend allocation. The Virginia Shareholders' Agreement with Special Allocation of Dividends can be tailored to meet the specific needs and circumstances of the close corporation. Different types of these agreements may include: 1. Proportional Dividend Allocation: This type of agreement distributes dividends based on each shareholder's ownership percentage in the close corporation. For example, if a shareholder owns 30% of the company, they will receive 30% of the total dividend payment. 2. Preferred Dividend Allocation: In some cases, certain shareholders may have preferential rights to receive dividends over others. These preferences may be based on factors such as the shareholder's position in the company's hierarchy or their investment contribution. Preferred shareholders receive their dividends before common shareholders. 3. Fixed Dividend Allocation: This type of agreement guarantees a fixed amount or percentage of the company's profits to be allocated as dividends to specific shareholders. The fixed allocation arrangement can be beneficial in situations where shareholders have different expectations or financial needs. 4. Conditional Dividend Allocation: This agreement allows for the allocation of dividends based on specific conditions or milestones being met, such as the achievement of certain financial targets, the completion of a project, or the company reaching a predetermined level of profitability. It ensures that dividends are only distributed when the close corporation meets the agreed-upon conditions. The Virginia Shareholders' Agreement with Special Allocation of Dividends among Shareholders in a Close Corporation addresses various important aspects, including the frequency of dividend payments, tax implications, the process for dispute resolution, and procedures for amending the agreement if necessary. It is advisable for close corporations in Virginia to consult legal professionals with expertise in corporate law to draft or review this agreement to ensure compliance with state regulations and to protect the rights and interests of shareholders.