It’s very common to build in a right of first refusal into a governing document. It’s a way of keeping the shares in the family. The way it works is that the partners have a right to match the material terms of any bona fide offer from a third party....
Termination of employment is a common trigger of an involuntary transfer. If you give a key person equity, and they leave the closely held company, then typically they cannot and reasonably should not retain their shares. They are are exceptions, but this is a common...
Disability is a common trigger of an involuntary transfer. If someone cannot perform, they are not able to contribute to the business. They will, meanwhile, continue to own shares and receive distributions (not salary). That alone is a difficult pill to swallow for...
Death is a common trigger of an involuntary transfer. Without a trigger, a person’s death does not sever their interest in the business. The heirs of an owner that is a person will be identified by his or her will or by the statute. Such heirs will take over ownership...
Divorce is a common trigger of an involuntary transfer. Just like bankruptcy, you don’t want to be in business with a partner’s spouse. It’s likely bad news. It’s likely he or she is not interested in the business, qualified to participate in the business or a...
Bankruptcy is a common trigger of an involuntary transfer. You don’t want to be partners with a partner’s creditors. Generally, you want to keep it in the family (or within the existing partners with whom you’ve agreed to be in business together). Having a creditor as...
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