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J. Warren
J. Warren, Attorney
Category: Business Law
Satisfied Customers: 2240
Experience:  Experience in general business transaction and formation matters.
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I own 25% of the shares of a privately held corporation worth

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I own 25% of the shares of a privately held corporation worth about $2,000,000. For tax purposes, it is a c corp. The other major shareholder "Jim" holds about 65% of the stock. The remaining 10% is split amoung 4 others. Jim and I have worked in the business on a daily basis since startup in 1995 and have had a good relationship. Due to changes in my personal life, I want to move on to something else. I would like the company to buy my shares. Being a small private company, I doubt I could find an outside buyer.
Before I approach Jim with a proposal, I would like to be sure I understand my legal options, if any, before I begin a negotiation.

What do you think?
Submitted: 4 years ago.
Category: Business Law
Expert:  J. Warren replied 4 years ago.
Hello! Thank you for your question today. My goal is to provide you with the information you seek.


Please note: (1) this is general information only, not legal advice; and (2) I will provide you with honest information and not necessarily to tell you might be hoping to hear.

A shareholder wishing to redeem his or her shares from a corporation should first review the bylaws of the corporation to determine if the bylaws provide for redemption procedure.

Typically bylaws will provide for that a shareholder may redeem shares of stock by providing written notice and the corporation has the first right of refusal to purchase the shares and if not exercised the remaining shareholders would have an option to purchase.

Bylaws typically provide for a purchase per share price based on an agreed to value. If the shareholders can't agree than a third party appraiser is used and if no agreement as to that value then the matter goes to arbitration to determine the value.

In the absence of agreement or provided for in the bylaws Georgia code Section 14-2 910-917 provide for the method of the transfer of shares. If the bylaws do not provide for the transfer of shares or restrictions thereof a written offer to the corporation is the process in which a shareholder would take. If the corporation refuses to purchase then the shareholders would have the opportunity. If corporation and remaining shareholders refuse then sale to an outside third party is permitted however the corporation would have a right of first refusal.

Worst case scenario is the shareholder must bring a compulsion action against the corporation to force the corporation to purchase the shares of stock. this is provided for in Georgia Code Section 14-2-916.

Here is a link to the applicable code sections: www.law.justia.com/codes/georgia/2010/title-14/chapter-2/article-9/part-2/

All my best & encouragement.

Please note that you are asked to rate my courtesy and professionalism, and not whether the answer supports your legal position. I only receive credit when rated 3 or higher. If for any reason you feel that a low rating is appropriate, please first give me the opportunity to address your concerns by clicking the "reply" tab.

All states have intricacies in their laws and any information given is simply information only and specifically is not intended to be, nor does it constitute, legal advice. This communication does not establish an attorney-client relationship with you.

 

Customer: replied 4 years ago.

Thanks for thr reference to the GA code. The section to which you refer seems to be only for a deceased shareholder. Did I read this correctly? Short of that, I take it there is no way to force the company to buy my stock.

Expert:  J. Warren replied 4 years ago.

There appears to be a lot of pieces moving here and if there are no bylaws I think an attorney based in Georgia may be able to provide you further value to your question. I will opt out for another expert to assist you. Thank you for your patience.

 

 

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