A Shareholder Buy-Sell Agreement is a crucial legal document designed to manage the sale or transfer of shares in a company. It outlines how and when shareholders can buy or sell their shares, ensuring smooth transitions and protecting the interests of remaining owners.
Typically, these agreements include provisions for determining share value, triggering events such as death, disability, or voluntary exit, and the process for initiating sales. They often feature right of first refusal clauses, giving existing shareholders the opportunity to buy shares before they are offered to outsiders.
The funding of these Agreements is typically provided through Life & Total Disablement Insurances. This helps maintain control within a desired group and prevents unwanted external influences.
By clearly defining these terms, a Buy-Sell Agreement minimizes conflicts and disruptions, ensuring business continuity and stability.
It is essential for businesses to periodically review and update this agreement to reflect changes in ownership, valuation methods, and legal requirements.