Prevent shareholder problems when a business partner dies or is disabled
Most small companies involve a limited number of shareholders, who often own their shares in the business in their own names. Let's assume A, B, C and D each own 25% of a company. The question arises: what happens if one of the shareholders, say D, dies? The risk is that if there is no formal agreement, and the surviving shareholders don't have the money to buy out the family (in the case of a right of first refusal), then D's shares will end up with his or her family, and A, B and C will be stuck with D's family as their new co-shareholder. That is unlikely to be good for the business, as the family would probably not have the required skills or interest to be an asset to the business. Fights could break out over issues such as dividend payments. The result is that both parties lose out - the remaining shareholders are stuck with a shareholder they don't want, and the late shareholder's heirs receive no real value for their shares. The solution is for co-shareholders to sign a buy-...
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