Q: I’ve inherited stock in a corporation that my uncle owned. What rights do I have?
A: You need to know what rights your uncle had to transfer the stock in the corporation. Two places to look are on the stock certificate (to see if there are restrictions on transferability or sale) and in the shareholders’ agreement (assuming he had one). Some shareholder agreements restrict the rights of a shareholder to bequest stock and restrict who can own shares. There may, in that agreement, be an obligation on the part of the company or the other shareholder(s) to buy-out your interest (if you are not permitted to own the shares) and the agreement might contain a formula to calculate the purchase price. The agreement may also state what to do if the parties cannot agree on the calculation of the purchase price. You also may have the ability to challenge the formula.
Erica B. Garay is the Chair of the Alternative Dispute Resolution practice group and a member of the firm’s Litigation practice. She is also an arbitrator and mediator and serves on the American Arbitration Association roster of neutrals for commercial and complex litigation.