who are shareholders at the time of the agreement and is made known to the corporation; If no shareholders agreement then using a form of governance that is typically suited for huge companies so why do people choose close corporations? First step to becoming a publically traded corporation Other times bad lawyering What might a shareholders agreement look like? Set up condition precedents and terms of who gets shares and how All about the contingencies Contracting as a Device to Limit the Majority’s Discretion As to Director Decisions Zion v. Kurtz Facts . Zion acquired all of the Group’s Class A stock, and Kurtz retained all of the Class B stock. Zion and Kurtz entered into a shareholders’ agreement, which provided that the company would not engage in any business or activities without the consent of the holders of the Class A stock. ROL. Under Delaware corporation law, in a close corporation a written agreement between a majority of the stockholders is valid even if it restricts or interferes with the board of directors’ powers. A shareholder’s agreement requiring minority shareholder approval of corporate activities is enforceable between the original parties to it.
Why would someone need to know there is a shareholder agreement? To put people onto notice that there is an agreement that dictates what the parties should and should not do The Modern Approach to Involuntary Dissolution MBCA 14.30 Grounds for Judicial Dissolution The court may order dissolution if a ground for dissolution exists. Discretion even to the courts as to whether the dissolution is appropriate even though grounds exist under the specific circumstances. Oppression – when a person is frozen out by involuntary dissolution subject to 14.34 or when the majority shareholder can buy out the minority shareholder. Options . Oppressed person petitions the court and asks for voluntary dissolution §14.30 but is subject to §14.34 which states that the majority can buy out the minority MBCA 14.34 Election to Purchase in Lieu of Dissolution Gives the majority rather than the minority the option of whether a buyout will occur. Courts allow this to keep the company going rather than make the company stop, provided that the buyout is fair. Gimpel v. Bolstein ROL. A corporation may be subject to dissolution if the majority fails to act with probity and fair dealing and their conduct becomes burdensome, harsh, and wrongful, amounting to oppression of the minority. Why does the corporation keep referring to him as a thief? Not part of the 1st generation or 2nd generation who were handling the company and made sure that it thrived and continued. Court shows the extreme hatred towards him as an embezzler but the company still cannot oppress him as he is allowed to get his fair share.
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- Corporation, Types of business entity, partner, Limited liability partnership