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Category: California Employment Law
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In california in a private close corporation where there are

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In california in a private close corporation where there are three sahre holders total, can the top position share holder sell stock to one of the other two share holders for less than than the actual value?

BizIPEsq. :

Hello, I will be assisting you

BizIPEsq. :

The answer is yes but...

BizIPEsq. :

the shareholders need to comply with the bylaws of the company and with any individual agreements they may have with one another. For example the reaming stock holder may have a right of first refusal (i.e. the stock may need to be offered to to that stockholder first at the same price before it is sold to someone else)

BizIPEsq. :

the bylaws agreement may also specify a minimum majority before stock can be sold. Sometimes the require majority is unanimous consent so the bylaws should be reviewed

BizIPEsq. :

as far as selling "below value", generally speaking in close companies there is no set valuation so it is fairly hard to determine the correct valuation. In addition, it is possible for a shareholder to sell stock at a loss if the shareholder is willing to sell at a loss. Absent a specific agreement on point the corporation corporation or the other shareholders cannot compel a sale price.

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Customer: replied 4 years ago.

Yes but?

Customer: replied 4 years ago.

thanks much lastly though what does shareholders cannot compel a sale price mean.