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Mandatory Buy-Out Agreements For Stock Of Closely Held Corporations, Douglas A. Kahn

Articles

A buy-out of a shareholder's stock is a sale of his stock holdings in a specific corporation pursuatnt to a pre-existing contract. In recent years such arrangements have, deservedly, become an increasingly popular planning device for shareholders in closely held corporations; they make it possible to limit the class of potential shareholders, provide liquidity for the estate of a deceased shareholder, and establish a value for stock which has no active market. There are two popular categories of buy-out plans. If the prospective purchaser of a decedent's shares is the corporation that issued them, the plan is called an "entity …