Exiting the Corporation

Cite this article as:"Exiting the Corporation," in The Business Professor, updated October 17, 2014, last accessed June 3, 2020, https://thebusinessprofessor.com/lesson/exiting-corporation/.
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Shareholder Exit Corporation

http://youtu.be/SY_xji_k3tE   Back To: BUSINESS ENTITIES, CORPORATE GOVERNANCE, & OWNERSHIP 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, how

 

Back To: BUSINESS ENTITIES, CORPORATE GOVERNANCE, & OWNERSHIP

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 shareholder’s ability to sell their shares.  In the absence of an agreement otherwise, the shareholder can readily sell her shares to any purchase. 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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