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Stockholders' agreements can make or break a closely held company.
Voting control is allocated, distribution policies established, buy-sell mechanisms defined, and the relationship of the owners organized. Most of the big decisions of a closely held company are made in the stockholders' agreement. In the context of S Corporations, these agreements take on even more importance in the form of various restrictions to ensure the corporation does not lose its pass-through status for federal income tax purposes.
This program provides a guide to planning and drafting the most essential provisions of stockholders' agreements for C and S corporations.
Part 2 topics include:
- Restrictions on transferability and mechanisms to buy/sell restricted stock
- Valuation methodologies for stock that does not have a liquid market
- Protective provisions for S Corps – preventing transfers to ineligible holders
- Provisions for approving the termination an S Corp election
- Close corporations and the ability to govern the company without a board of directors