S Corporations shareholder agreements include an explanatory statement consent to S election, restriction on sale of the common stock, restrictive legend, request to transfer, transfer by reason of death, transfer in violation of agreemtn, stock issued or transferred in the future, revocation of S corporation election, termination, miscellaneous and signatures of shareholders as well as witnesses.
The explanatory statement sets out the intention of the company to be taxed as an S Corporation. Each shareholder agrees to the election by the company of S corporation status and that they each will not act in a manner prejudicial to the S corporation status. In addition, each shareholder agrees not to sell, assign, transfer etc. all of part of his/her shares except pursuant to the shareholder agreement.
Further provisions of the S Corporation shareholder agreement includes that each stock certificate must bear a conspicuous restrictive legend on the sale, transfer etc. of the stock. If a shareholder wants to sell or transfer stock, the shareholder must give notice to the company of a specified period and the company must reasonably consent to the action requested. However, if a shareholder transfers his or her stock in violation of the terms of the shareholder agreement, such transfer is void.
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Gabrielle L. Strich, Esq.
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