Contact Us

If you still have questions or prefer to get help directly from an agent, please submit a request.
We’ll get back to you as soon as possible.

Please fill out the contact form below and we will reply as soon as possible.

  • Course Subjects
  • Tutoring
  • Home
  • Law, Transactions, & Risk Management
  • Business Entities, Corporate Governance & Ownership

Exiting the Corporation - Explained

How Shareholders Leave the Business

Written by Jason Gordon

Updated at April 5th, 2023

Contact Us

If you still have questions or prefer to get help directly from an agent, please submit a request.
We’ll get back to you as soon as possible.

Please fill out the contact form below and we will reply as soon as possible.

  • Marketing, Advertising, Sales & PR
    Principles of Marketing Sales Advertising Public Relations SEO, Social Media, Direct Marketing
  • Accounting, Taxation, and Reporting
    Managerial & Financial Accounting & Reporting Business Taxation
  • Professionalism & Career Development
  • Law, Transactions, & Risk Management
    Government, Legal System, Administrative Law, & Constitutional Law Legal Disputes - Civil & Criminal Law Agency Law HR, Employment, Labor, & Discrimination Business Entities, Corporate Governance & Ownership Business Transactions, Antitrust, & Securities Law Real Estate, Personal, & Intellectual Property Commercial Law: Contract, Payments, Security Interests, & Bankruptcy Consumer Protection Insurance & Risk Management Immigration Law Environmental Protection Law Inheritance, Estates, and Trusts
  • Business Management & Operations
    Operations, Project, & Supply Chain Management Strategy, Entrepreneurship, & Innovation Business Ethics & Social Responsibility Global Business, International Law & Relations Business Communications & Negotiation Management, Leadership, & Organizational Behavior
  • Economics, Finance, & Analytics
    Economic Analysis & Monetary Policy Research, Quantitative Analysis, & Decision Science Investments, Trading, and Financial Markets Banking, Lending, and Credit Industry Business Finance, Personal Finance, and Valuation Principles
  • Courses
+ More

How do shareholders exit the corporation?

Shareholders are generally free to leave the corporation at any time. A shareholder exit does not give rise to dissolution of the corporation. There may, however, be rules in place about a shareholders ability to sell their shares. 

In the absence of an agreement otherwise, the shareholder can readily sell her shares to any purchaser. While this may run afoul of securities law, it is not necessarily prohibited under state law. 

Shares of closely-held entities are generally subject to restrictive agreements that requires shareholders to sell or offer to sell their shares back to the corporation or to other shareholders before offering the shares to third parties. These are known as buy-sell agreements.

Back To: BUSINESS ENTITIES, CORPORATE GOVERNANCE, & OWNERSHIP

Related Topics

  • Business Entities (Intro)
  • Why is studying business entities important?
  • Considerations When Forming a Business Entity
  • Holistic (Detailed) Overview of Setting Up a Business Entity
  • What are Business Entities?
  • What is a Closely-held vs Publicly-held Business?
  • What are the main types of business entity?
  • What are the primary characteristics of business entities?
  • What is Creation of a business entity?
  • Where to Form a Business
  • Incorporating in Delaware
  • Forming an LLC in Nevada or Wyoming
  • Creating a Company Offshore
  • Promoter
  • Promoter Liability
  • De Jure Corporation
  • Ultra Vires
  • Brassplate Company
  • What is Maintenance of a business entity?
  • What is Continuity of a business entity?
  • Business Continuity Planning
  • Buy Sell Agreements
  • Shotgun Clause
  • Winding Up
  • Dissolving a Foreign Qualification
  • What is the Ownership structure of a business entity?
  • Joint Stock Company
  • Parent Company
  • Subsidiary Company
  • Wholly-Owned Subsidiary
  • Operating Subsidiary
  • Holding Company
  • State-Owned Enterprise
  • Mutual Company
  • Conglomerate
  • What is Control of a business entity?
  • What is Personal liability of owners of a business entity?
  • Entity Theory
  • Piercing the Corporate Veil
  • What is Compensation of business owners?
  • What is Taxation of a business entity?
  • What is Sales & Use tax?
  • What are payroll and self-employment taxes?
  • What are the major characteristics of a Sole proprietorship?
  • Uniform Partnership Act
  • Uniform Limited Partnership Act
  • Partnership Agreement
  • At-Will Partnerships
  • Responsibilities of Partners to the Partnership
  • Silent Partner
  • Funding the Partnership
  • How are Partners Compensated
  • Splitting Equity in an Industrial Partnership
  • Terminating the Partnership
  • Types of Partnerships
  • What are the main characteristics of a General partnership?
  • Tort Liability of General Partner
  • What are the main characteristics of a Joint venture?
  • What are the main characteristics of a Limited partnership?
  • Family Limited Partnership
  • Master Limited Partnership
  • What are the main characteristics of a Limited liability partnership?
  • What are the main characteristics of a Limited liability company?
  • Forming an LLC
  • Articles of Organization
  • Operating Agreement or LLC Agreement
  • Why You Need an LLC Agreement
  • LLC Compensation of Members
  • LLC Taxation
  • Converting to an LLC
  • What are the main characteristics of a Corporation
  • Articles of Incorporation 
  • What to include in the Articles of Incorporation
  • Corporate Bylaws
  • Exiting the Corporation
  • Dissenter's Rights
  • What are the requirements to be an S Corporation?
  • Non-Profit Organization
  • NonProfit Business Entities
  • Private Foundation
  • A Detailed Explanation of the Sole Proprietorship
  • Taxation of Sole Proprietorship
  • A Detailed Explanation of the General Partnership
  • 50/50 Partnerships: Never a Good Idea
  • Publicly-Traded Partnerships
  • A Detailed Explanation of the Limited Liability Company
  • A Detailed Explanation of the Corporation
  • Keepwell Agreement (Letter of Comfort)
  • Personal Service Corporation Definition
  • A Detailed Explanation of the Non-Profit Entity
  • Public Limited Company (UK)
exiting the corporation leaving work

Was this article helpful?

Yes
No

Related Articles

  • Parent Company - Explained
  • Role of Directors in a Corporation - Explained
  • Shareholder Direct and Derivative Actions - Explained
  • Tort Liability of Partners - Explained



©2011-2023. The Business Professor, LLC.
  • Privacy

  • Questions

Definition by Author

0
0
Expand