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Can I make a provision in my bylaws that states the company…

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Can I make a provision...
Can I make a provision in my bylaws that states the company has the right to repurchase shares at a value of the original price and 1.5% interest annually?
Submitted: 11 months ago.Category: Business Law
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5/31/2017
Business Lawyer: Bill Attorney, Lawyer replied 11 months ago
Bill Attorney
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Satisfied Customers: 2,254
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Dear Customer,

Thank You for posting your question to just answer today. This is attorney Bill offering legal information specific to your concerns.

This is permissible you include it in the articles of association that you register with the secretary of state's office.

Wisconsin law on the purchase of a company's own shares expressly authorizes this here:

"

180.0631 Corporation's acquisition of its own shares.

(###) ###-####1)(1) Treasury shares shall be considered issued shares but not outstanding shares.(###) ###-####2) (2) A corporation may acquire its own shares and all shares so acquired after December 31, 1990, constitute treasury shares unless any of the following conditions exists:(###) ###-####2)(a) (a) The articles of incorporation prohibit treasury shares or prohibit the reissuance of acquired shares.(###) ###-####2)(b) (b) The board of directors, by resolution, cancels the acquired shares, in which event the shares are restored to the status of authorized but unissued shares.(###) ###-####3) (3) (###) ###-####3)(a)(a) If the articles of incorporation prohibit treasury shares but do not prohibit the reissuance of acquired shares, all of its own shares acquired by the corporation shall be restored to the status of authorized but unissued shares.(###) ###-####3)(b) (b) If the articles of incorporation prohibit the reissuance of acquired shares, the number of authorized shares is reduced by the number of shares acquired by the corporation, effective upon amendment of the articles of incorporation, except in the case of an investment company that has authorized an indefinite number of shares. The board of directors may adopt articles of amendment under this paragraph without shareholder action and deliver them to the department for filing. The articles shall include all of the following information:"

You can include the interest rate in the articles of association.

Please be patient for my follow up and answer when you request additional clarification or information and REMEMBER TO RATE POSITIVELY TODAY FOR THE INFORMATION RECEIVED.

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Customer reply replied 11 months ago
I read that statute is said nothing about limit the purchase price. So this clause is legal:Upon death or disability of a stock holder, the company shall have the right to repurchase the stock at book value or the original stock price plus a 1.5% increase for every year the stockholder held the stock.
Customer reply replied 11 months ago
Also, would a corporate resolution be better than a bylaw? I have employees I want to give stock to, but I want to be able to repurchase it at only a 1.5% increase.
Business Lawyer: Bill Attorney, Lawyer replied 11 months ago

Yes you should include this term and any other specific term you want to limit the repurchase of a company's own shares. You can include the 1.5% or any other figure as the repurchase provisions are defined in the articles as registered by you. You can go over or above the 1.5% as desired or prohibit the purchase completely as desired.

This needs to be in the articles as otherwise the repurchase is allowed in law.

Please remember to rate positively my response before exiting.

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Attorney Bill

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Customer reply replied 11 months ago
I don't understand what you mean by "This needs to be in the articles as otherwise the repurchase is allowed in law."
Business Lawyer: Bill Attorney, Lawyer replied 11 months ago

companies in Wisconsin are permitted to repurchase their own shares for market value in Wisconsin; this can be changed by you expressing other language in the articles, including the 1.5 % premium as you indicate.

To effect the change you include your provision in the articles.

Please remember to rate positively my response before exiting.

THIS IS HOW I GET A CREDIT FOR MY TIME AND RESPONSE

SO I HOPE YOU RATE 5 STARS TODAY

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Attorney Bill

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Customer reply replied 11 months ago
But you could you repurchase the shares for less than market value? Let's say market value is $100 per share, but you bought one share for $10 and had it for 2 years. The price would only be $10.30. Is that legal?
Business Lawyer: Bill Attorney, Lawyer replied 11 months ago

No it would have to be above market value; You couldn't stipulate for a price less than market value as that with conflict with the issued and authorized shared capital in the articles of association.

The company can by back the shares and reissue the shares for a lower value if that is what you are trying to achieve, this altering the authorized and issued share capital.

Best

Bill

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Business Lawyer: Bill Attorney, Lawyer replied 11 months ago

Dear Customer,

I would like to follow up with you on your question in which I replied to a few days ago and gave an answer. Do you need any more information ?

When Finished PLEASE REMEMBER THAT WE EXPERTS COUNT ON POSITIVE RATINGS

THIS IS HOW I GET A CREDIT FOR MY TIME AND REPONSE PREVIOUSLY

SO I HOPE YOU RATE 5 STARS TODAY

Thanks

Attorney Bill

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