Legal Question in Business Law in California

There seem to be three issues here: (1) whether the proposed transaction is "legal," which I take to mean does it accomplish the desired result; (2) whether the deal is fair to you and your wife; and (3) to what extent your wife should (or must) participate in the transaction.

As to #1, on the face of it, it looks to me as though there is no reason you cannot divest your interest by selling your shares back to the corporation itself, rather than directly to the 49% guy. He will then own 100% of the "issued and outstanding" stock. He may or may not realize that the stock ledger does not reflect his 49% interest, and I assume you will correct this oversight and bring it into conformity with reality, or at least advise him of the problem and work it out.

As to fairness to you, I have no idea and no way to form an opinion as to whether the nominal value you've agreed upon is adequate. Note that if the payment comes from the corporation's money, 51% of it you are basically paying to yourself. Watch out for the possibility that the payment drains corporate cash to the extent it cannot pay any other debts it may have; that likely would be an illegal distribution. Also, ask your tax accountant for his/her views on sale of your shares back to the issuing company, rather than to the 49% co-owner. There is probably a tax reason for structuring the deal this way.

Third, as to your wife's necessary and proper role here. It is in the 49% guy's best interest for your wife to be a co-seller in all respects, especially if she were ever instrumental in the formation or management of this company. Even so, and assuming the corporation does not own any real property, you probably have the legal power to sell the stock. If the company has issued share certificates, all should be endorsed the way they are made out; i.e., if joint ownership is indicated on the face, both must endorse to transfer. If there is a contract, it minimally should have a block at the end which your wife will sign saying that she has read, understands and approves the deal. Better yet, both of you sign as co-principals.