Owners of family-owned corporations often enter into shareholder agreements that spell out whether and to whom corporate shares can be transferred. Frequently, these agreements provide for rights of first refusal by the other stockholders or a stock repurchase by the
Family Business Perspectives
A Legal Resource for Family Owned Businesses
Family Business Perspectives, published by Murtha Cullina LLP, focuses on legal issues affecting family-owned businesses. The blog covers topics such as buy-sell agreements, shareholder rights, intra-family business disputes, lease arrangements between related entities, fiduciary duties of family members, and strategies for smooth mergers and acquisitions. It also addresses practical concerns like valuation disputes, insurance considerations during transactions, and compliance with regulatory requirements. The content is aimed at helping family business owners and their advisors navigate complex legal and financial challenges unique to family enterprises.
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Do You Have a Reasonable Expectation of Receiving Dividends if You Acquired Your Shares in a Family-Owned Corporation Through Gift or Inheritance?
Corporate shareholders often expect to receive dividends in connection with their ownership of corporate shares. This is particularly true when owners invest capital in or provide other services to the company in exchange for their ownership interests. But do shareholders’…
Will Your Family-Owned LLC Be Required to Pay the Fair Value of a Withdrawing Member’s Interest?
Family-owned businesses that are organized as limited liability companies typically reflect the terms of the company’s governance, along with the members’ financial rights and obligations, in a written operating agreement. The terms of the operating agreement often specifically include what,…
Do You Have an Enforceable Contract for the Sale of Family-Owned Business Interests or Just an Agreement to Agree?
Family members often transfer family-business ownership interests or other assets between each other. Their discussions sometimes progress from informal negotiations to a written term sheet to a final written agreement. However, a term sheet itself can be found to be…
Massachusetts SJC Sends Reminder of Fiduciary Duties in Closely-Held Corporations
In a recent decision, the Massachusetts Supreme Judicial Court ruled that directors of a corporation owe a fiduciary duty to the corporation itself, and not to the stockholders of the corporation (as is the case in Delaware, among other states).…
If You Expect to Work in the Family-Owned Business for Life, Be Sure to Get It in Writing
Family-owned businesses often employ multiple family members. Even if there is an expectation that employment will continue indefinitely, the company and the family member employees both usually reserve the right, explicitly or implicitly, to terminate the employment “at-will,” meaning at…
Pay Attention to Bylaws When Taking Corporate Actions
All too often, family businesses are run in an “informal” fashion, with insufficient attention being paid to corporate formalities, including requirements set forth in a corporation’s bylaws. The Delaware Chancery Court recently ruled in Rainbow Mountain, Inc. vs. Begeman (March…
Corporate Formalities Matter in the Transfer of Shares of Family-Owned Businesses
Shares in family-owned businesses are often transferred between family members, whether through a sale or gift during a shareholder’s lifetime or through inheritance after an owner’s death. The parties to such a transfer should make sure it is properly documented…
Are you paying your children too much to work in the family business? The IRS might think so.
A United States Tax Court recently issued a decision after trial that should serve as a reminder to management and controlling shareholders of family-owned businesses that salaries or other compensation paid to family-member employees may only be deductible if the…
Carefully Consider the Scope of Releases When Settling Claims between Family-Business Owners
Litigation among family-business owners often ends with a negotiated settlement agreement instead of a trial and entry of judgment on the parties’ claims. Through a settlement, the parties have the flexibility to agree upon any applicable business terms, including any…