If I’m buying out the minority and only other shareholder in my corporation, what to do if along with our agreed upon purchase price they want 30% of the company’s cash?

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If I’m buying out the minority and only other shareholder in my corporation, what to do if along with our agreed upon purchase price they want 30% of the company’s cash?

Is he entitled? I’m a 70% and they are a 30% shareholder. We have no shareholder agreement in place but have verbally agreed on a purchase price for their shares.

Asked on July 19, 2019 under Business Law, New York

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 1 year ago | Contributor

You and they have to voluntarily work it out--that is, mutually agreed on something. If there is no buy-out agreement, which there evidently isn't, you have no right to buy out a minority shareholder and they have no obligation to sell to you, and no formula, etc. to determine price--if they choose to sell and you choose to buy, it's because you each want to do so, which means you have both agreed on what will be paid. Each can ask for or offer whatever they want. He can ask for the price for the share plus the cash and refuse to sell unless you give him that; you in turn can refused to pay that much and so refuse to sell. Ultimately, as stated, you and he have to work this out between the two of you; the law does NOT fix a price.


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