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Close Corporation Agreement in Ohio: What You Need to Know

If you’re starting a business in Ohio with a few partners, a close corporation may be the right structure for you. A close corporation is similar to a regular corporation, but it has a few key differences that may make it a better fit for your needs.

One of the most important aspects of forming a close corporation in Ohio is creating a close corporation agreement. This document outlines the rights and responsibilities of each shareholder and can help prevent disputes down the line. Here’s what you need to know about close corporation agreements in Ohio.

What is a Close Corporation Agreement?

A close corporation agreement is a legal document that outlines the rules and regulations of a close corporation. It is sometimes also called a shareholders’ agreement. Each shareholder in the close corporation must sign the agreement, which becomes a legally binding contract.

The purpose of a close corporation agreement is to define the roles and responsibilities of each shareholder, as well as the corporation’s goals and objectives. It also includes provisions for how the corporation should be managed and how disputes should be resolved.

Why is a Close Corporation Agreement Important?

A close corporation agreement is important because it helps prevent disputes between shareholders. By outlining everyone’s roles and responsibilities, there is less room for confusion or disagreements about who is responsible for what. It also ensures that everyone is on the same page about the corporation’s goals and objectives.

Another benefit of a close corporation agreement is that it can help protect shareholders’ investments. The agreement can include provisions for how shares can be transferred or sold, which can prevent unwanted parties from buying into the corporation.

What Should You Include in a Close Corporation Agreement?

When creating a close corporation agreement in Ohio, you should include the following:

1. Shareholder Roles and Responsibilities – This section should outline each shareholder’s role in the corporation and what their responsibilities are.

2. Management – Who will manage the corporation? Will it be the shareholders or will a board of directors be appointed?

3. Stock Transfer Provisions – How can shares in the corporation be transferred or sold? Are there any restrictions on who can buy shares?

4. Dispute Resolution – What happens if there is a dispute between shareholders? How will it be resolved?

5. Profit Distribution – How will profits be distributed among the shareholders? Will they be based on each shareholder’s ownership percentage?

6. Dissolution – What happens if the corporation needs to be dissolved? How will any remaining assets be distributed?

Conclusion

A close corporation agreement is an important document that outlines the rules and regulations of a close corporation. It helps prevent disputes between shareholders and ensures that everyone is on the same page about the corporation’s goals and objectives. When creating a close corporation agreement in Ohio, it’s important to include provisions for shareholder roles and responsibilities, management, stock transfer, dispute resolution, profit distribution, and dissolution. If you need help creating a close corporation agreement, consider working with a lawyer who has experience in business law.

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