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Agreement for Sale of Member`s Interest in a Close Corporation

When it comes to buying or selling a business, there are many legal agreements that need to be addressed and signed. One of these agreements is the “Agreement for Sale of Member`s Interest in a Close Corporation.” This agreement is needed when one member of a close corporation wants to sell their ownership stake to another member or an outside party.

Understanding Close Corporations

Before delving into the specifics of the agreement for the sale of a member`s interest in a close corporation, it`s important to understand what a close corporation is. A close corporation is a type of company that has a limited number of shareholders, usually no more than 30. Close corporations are often family-owned or have a small group of investors who have a close relationship with each other.

Agreement for Sale of Member`s Interest in a Close Corporation

The agreement for the sale of a member`s interest in a close corporation outlines the terms of the sale, including the purchase price, payment terms, and any restrictions on the buyer`s ability to take over the selling member`s ownership stake.

One of the most important components of this agreement is the purchase price. The purchase price is typically determined by a valuation of the business, which takes into account the value of the company`s assets, liabilities, and potential for future growth.

Payment Terms

The payment terms of the agreement are also critical. Typically, the buyer will pay a portion of the purchase price upfront, with the remainder paid over time. The terms of these payments should be clearly outlined in the agreement, including the due date of each payment and any interest that will be charged.

Restrictions on the Buyer

Finally, the agreement may include restrictions on the buyer`s ability to take over the selling member`s ownership stake. For example, the agreement may require the buyer to meet certain qualifications, such as having a certain level of experience or a certain amount of capital. Additionally, the agreement may prohibit the buyer from selling their newly acquired ownership stake for a certain period of time.

Conclusion

In conclusion, the agreement for the sale of a member`s interest in a close corporation is a legally binding document that outlines the terms of the sale of an ownership stake in a close corporation. This agreement is important for protecting the interests of both the buyer and the seller, and it should be drafted with the help of a qualified attorney who has experience in close corporation agreements. By following the guidelines outlined in this article, you can ensure that your agreement is comprehensive and legally sound.


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