10.3.2.4 Close Corporation Stock Redemption Plans
A shareholder in a close corporation may arrange for the sale of his/her interest in the business in a way similar to that used by a partnership. In a close corporation buy-sell agreement, either the surviving shareholders or the corporation, at the death of one of the shareholders, will purchase the stock at a predetermined price or at a price to be determined when the purchase takes place.
In a buy-sell agreement involving a close corporation, the parties to the agreement are the deceased shareholder's estate and either surviving shareholders or the corporation. The agreement calls for the estate to sell the stock and the shareholders or the corporate entity to buy it. In the case of shareholders, they use their own funds to purchase the deceased's ownership interest. In the case of the corporation as party to the contract, corporate funds are used to purchase the stock.
