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lwpat, Attorney
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Experience:  Attorney with over 35 years of business experience.
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Can 50% stock ownership in Kansas family farm corp (not S )

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Can 50% stock ownership in Kansas family farm corp (not S ) force sell? Stock is in trust which calls for sell if option to buy is not taken. at time trust was formed the lawyer thought ownership was 51%
Submitted: 2 years ago.
Category: Business Law
Expert:  lwpat replied 2 years ago.
Can you explain your situation and what you are trying to accomplish in more detail?
Customer: replied 2 years ago.
If trust set up with 51% controlling interest but in fact the trust only had 50% interest I would like to know if in Kansas what my options might be to force a sell or dissolution of the stock as the trust indicated before it was shown to only own 50%
Expert:  lwpat replied 2 years ago.
As I understand it there is a trust document giving someone a 51% ownership and someone else a 49% ownership. Is that correct and what party are you? What does the trust document say about termination or buy sell?
Customer: replied 2 years ago.
Trust owns 50% of stock Not 51% as thought. Trust stock to be bought within 3years by person who owns the other 50% of the family stock outside of the trust. My question if party does not buy the trust stock can the trust force the disoulation of the corp as it would have with the 51% ownership of the stock. The trust document says to terminat if not bought at the end of 3 yrs.
Customer: replied 2 years ago.
Relist: Other.
never answered think never undstood question
Expert:  Richard - Bizlaw replied 2 years ago.
Hello, I will try to help you. Is there any dead lock between the two 50% owners over the management of the business? Was the non trust shareholder supposed to buy out the trust at the end of 3 years otherwise what was thought to be a majority stake would be sold?
Expert:  lwpat replied 2 years ago.
What is to happen at the end of the three years with that 50% of the stock. Does it all go to you?
Customer: replied 2 years ago.

The person that owns 50% of the stock in the corp has the right to buy the trust owned 50% of the corp stock at any time during 3 years and if he does not the trust is to vote all its shares for dissolution of the corp and it would be a done deal , yes I would receive part of the funds from the sell and I have no role in management.

My question is can one force sell without majority stock interest?

Expert:  lwpat replied 2 years ago.
My question is can one force sell without majority stock interest?

Yes. The trust can demand that the corporation be dissolved and the proceeds distributed. It will take a court action however since it is fifty fifty rather than the 51%.
Expert:  Richard - Bizlaw replied 2 years ago.

Normally, you cannot force a dissolution with 50% ownership unless there is a deadlock on some major issue usually which has the effect of paralyzing the corporation. That is when court ordered dissolution comes into play. In your situation the deadlock would be on selling the corporation. The 50% owner gave the other 50% owner 3 years to buy the trust out. I do not know if there is any agreement from the other 50% owner on this arrangement or on the pricing mechanism but this may be a sufficiently different circumstance to permit the court to order the dissolution and sale of the business. You would start the process by filing suit to dissolve the corporation.

 

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Richard - Bizlaw, Attorney
Category: Business Law
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Experience: 30 years of corporate, litigation and international law
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Expert:  lwpat replied 2 years ago.
Here is the statute

(d) If the stockholders of a corporation having only two stockholders, each of which owns 50% of the stock therein, are unable to agree upon the desirability of dissolving the corporation and disposing of the corporate assets, either stockholder may file with the district court a petition stating that it desires to dissolve the corporation and to dispose of the assets thereof in accordance with a plan to be agreed upon by both stockholders. Such petition shall have attached thereto a copy of the proposed plan of dissolution and distribution and a certificate stating that copies of such petition and plan have been transmitted in writing to the other stockholder and to the directors and officers of such corporation.

Unless both stockholders file with the district court: (1) Within three months of the date of the filing of such petition, a certificate stating that they have agreed on such plan, or a modification thereof; and (2) within one year from the date of the filing of such petition, a certificate stating that the distribution provided by such plan has been completed, the court may either: (A) Dissolve such corporation and, by appointment of one or more receivers with all the powers and title of a receiver appointed under K.S.A. 17-6808 and amendments thereto, may administer and wind up its affairs; (B) order the redemption of the stock of one of the stockholders on such terms as are just and equitable; or (C) decline to grant any relief. Either or both of the above periods of time may be extended by agreement of the stockholders, evidenced by a certificate filed with the court prior to the expiration of such period.


http://kansasstatutes.lesterama.org/Chapter_17/Article_68/

 

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lwpat, Attorney
Category: Business Law
Satisfied Customers: 25384
Experience: Attorney with over 35 years of business experience.
lwpat and 10 other Business Law Specialists are ready to help you

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