September 2011

Stockholder’s Agreements: Controlling the Transfer of Stock

1 min


In addition to all of the day-to-day, operational decisions that go into running a business, the principal stockholders of a privately-held company must make many choices about what rights and obligations the company’s stockholders will have with respect to each other as owners of the company and with respect to the company itself. These choices include how company-level decisions will be made, who will be elected to the company’s board of directors, how to resolve any impasses if the decision-makers disagree, who can become a stockholder of the company, and what happens if one of the stockholders “wants out”. Perhaps the most important of these types of decisions relates to what sort of restrictions apply to the ownership and transfer of the company’s stock.

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