How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask MShore Law Your Own Question
MShore Law
MShore Law, Attorney
Category: Business Law
Satisfied Customers: 25285
Experience:  Drafted Negotiated and/or Reviewed Thousands of Commercial Agreements
Type Your Business Law Question Here...
MShore Law is online now
A new question is answered every 9 seconds

We initially incorporated a private S-Corp with four equal

This answer was rated:

We initially incorporated a private S-Corp with four equal owners. Since that time we have allowed others to buy stock in the company and the four original owners pro-rata share is established. We have Buy-sell insurance on the four original owners and have a draft buy-sell agreement yet to be signed by all shareholders. My question is if we want to remove one of the original owners (shareholder) and have the S-Corp buy back the stock what options do we have? Can they hold on to their shares even though we remove them from the company as an officer/board member? I assume there will be a good faith offer based on our latest stock evaluation for their portion of the stock.
Thank you for the post, what do the bylaws state with respect to the forced sale of shares of stock?
Customer: replied 7 years ago.
The Bylaws do not specifically state anything regarding a forced sale. The Stock Certificate states that the holder or a duly appointed attorney can endorse a transfer of the stock share. We are drafting a collective buy-sell agreement that addresses death, individuals leaving and the like, but nothing regarding us wanting to rebuy (forced) the company stock. We have had numerous discussions regarding the buy-out of one of the founders but never based on negative situations. We are a Delaware Corportation DBA is NC.
Thank you, XXXXX XXXXX cannot force a sale, the Corp will have to make a compelling offer and amend its bylaws so as to be able to force a sale via a Board vote should a similar situation arise in the future
Customer: replied 7 years ago.
Thanks, That's what I assumed. What if the individual in question has not paid back in full their portion of the investment in the company that is the basis for their pro-rata share? Would we make our compelling offer on that fact?

Yes, that would make a compelling offer because you could argue that the failure to pay back the full portion offsets the ownership interest.
MShore Law and 4 other Business Law Specialists are ready to help you
Customer: replied 7 years ago.
Thank you, XXXXX XXXXX good day.