Legal Question in Business Law in Virginia

corporation shareholder buy out

In an S Corp, with 2 shareholders, if one of the shareholders suddenly wants out of the corporation is the other shareholder required to buy that person out for the amount they have invested, or is the person (who wants out) required to find their own new shareholder to buy in?

ie-one shareholder bought in for $30,000; invested an additional $30,000 and now wants out and wants all their money back?

Is the other shareholder required to 'buy them out' and give them back all the money they invested? And, no, there is nothing written into the corp that states anything about that being a requirement.


Asked on 9/20/07, 9:26 am

2 Answers from Attorneys

Daniel Press Chung & Press, P.C.

Re: corporation shareholder buy out

Absent an agreement, there is no general right or duty to have another shareholder buy out one who wants to sell, nor is there anything that would fix the price at the amount invested.

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Answered on 9/20/07, 11:07 am
Thomas Dunlap Dunlap, Grubb & Weaver

Re: corporation shareholder buy out

You need to look to the shareholder agreement. Standard agreements usually provide a mechanism to force a buy-out depedning on the circumstances. The other route, a drastic one, is a judicial disloution pursuant to the Virginia Code. Feel free to give me the details - let me knwo if you have an agreement.

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Answered on 9/20/07, 2:26 pm


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