While limited liability companies (LLCs) and partnerships allow their owners to enjoy more flexibility in some aspects, the majority of industry-leading companies are structured as corporations.
Different types of business required different approaches when it comes to transferring ownership of a company’s shares and interest in Florida.
In this article, you will find out how to transfer ownership of a corporation in Florida.
Why Would Someone Transfer Ownership of a Corporate Business in Florida?
In the corporate world, business owners can transfer ownership of a company either in part or in full. Many reasons may lead someone to transfer ownership of a corporation in Florida, such as:
- When a business partner wants to buy out another partner’s share
- When a business partner wants to sell out a portion of the business to someone else
- When a business partner divorces
- When a business partner is suffering from mental/physical burnout
- When a business partner wants to transfer ownership to his/her heir(s) before retiring
- When a company is affected by excessive competitiveness or market pressure
Regardless of the purpose behind the transfer of ownership, it is essential to consult with an expert business attorney in Florida to assess each case individually and determine the best strategy to ensure a smooth ownership transition.
Transferring Ownership of a Business in Florida – The Basic Elements
Unlike many people may think, corporations are the smoothest type of business structure in terms of ownership transfer.
There are distinct methods of transferring ownership, which means owners have to determine which method available is the best for their business and their individual purposes.
In a corporation, the company’s shares represent ownership. Hence, the more shares/stocks someone has, the greater its level of ownership is. It is impossible to transfer ownership of a corporate business without transferring the company’s shares.
Technically, everyone who owns stocks in a company owns a portion of the business. However, different types of shares equal different rights for distinct owners.
Different Methods to Transfer Ownership of a Florida Corporate Business
As different types of shares grant different ownership rights, the first step is to know whether a stock owner has the right to transfer ownership.
Accordingly, it is fundamental to double-check the company’s shareholder agreement, which describes all the aspects regarding how a corporate business should operate.
After assessing the validity of the process, it is time to draft a share transfer agreement to complete the transfer of ownership. It is crucial to work with an expert business attorney to elaborate the terms and provisions within the contract, as well as preventing legal issues.
In Florida, there are two main forms of transferring ownership of a corporation – gradual sales and outright sales.
When someone transfers ownership of a corporation via gradual sale, the buyer receives the shares over a pre-determined period, while he/she is still paying the installments. Typically, this method is used for buyers who cannot afford a one-time large payment.
On the other hand, when someone transfers ownership of a corporation outright, the buyer retains all shares and ownership rights immediately after making a one-time payment (usually a large amount of money).
How Do I Transfer Ownership of a Business in Florida? – An Overview
Regardless of the type of method employed, the guidance of an expert business attorney is crucial to transfer ownership of a corporate business.
Typically, any well-drafted shareholder agreement dictates the steps to complete for transferring ownership of a corporation. However, if there is no shareholder agreement in place, there are common checkpoints that distinct businesses can follow.
The first step is to decide how much ownership an owner may want to transfer. Depending on how many shares an owner decides to transfer, he/she can either retain a percentage of ownership to keep voting rights or cut ties entirely.
Then, it is time for an in-depth valuation of shares/stocks, which will determine how many shares the current owner has and how much these shares are worth.
Typically, after assessing the percentage of ownership to be transferred, an owner must seek approval from the corporate board of directors to proceed with the transaction. Then, the owner can sign the share transfer contract to close the deal.
Notice that the share transfer contract is the core of the transaction, as it is the document that outlines the amount of shares/stocks sold, the parties involved in the transaction, the amount paid for the shares/stocks, and other crucial information.
How to Determine Which Option is Ideal for Your Company – Work with Jurado and Associates, P.A.
Transferring ownership of a corporate business in Florida requires a strategic approach. Waste no time with uncertainty. Call Attorney Romy B. Jurado today at (305) 921-0976 or send an email at Romy@juradolawfirm.com to schedule a consultation.