Exiting the Corporation - Explained
How Shareholders Leave the Business
Written by J. Mance Gordon
Updated at April 20th, 2024
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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.
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