One thing you need to keep in mind in dealing with all forms of business is that you can often change the legal provisions that govern the obligations and rights of owners by convention. A sale-sale form contains details on who can or cannot buy the shares of the abandoned or deceased owner, how the shares can determine, and what events lead to the sale contract coming into effect. An involuntary transfer of value may also take place in the event of the death of a shareholder. Suppose S, A and T are equal shareholders. Each shareholder owns and beneficiaries of a policy on the standard of living of the other two shareholders. Suppose T dies and T`s estate sells the T to A and S shares, increasing their percentage in the business. T`s Estate also sells the policy on life from A to S and the policy on life from S to A; This will provide the remaining shareholders with additional assurance to acquire the increased shares of the rest of the shareholder in the company. This strategy also seems to be a good idea. However, the parties generated a transfer of value through this transaction. Since the prohibition on the transfer of shares for life cannot be considered appropriate, shareholder agreements must find a narrow line between maintaining control of the owner of the shares and not charging the right of shareholders to sell shares. The most common mechanism for achieving the right balance is to give the company and/or non-ceding shareholders the right to acquire shares of a shareholder yielding at the price that a third party is willing to pay. If the rental of the value of the stock is important for the property tax, the price of the shares offered to the company and/or non-ceding shareholders should be the price of (1) at the cheap price of the third party or (2) of the applicable price in the event of the death of the surrendered shareholder.
When a cross-purchase contract is used, homeowners purchase life insurance in the other person`s life. With the use of a business purchase contract, the company manages a policy that supports the lives of its owners, the company being designated as the beneficiary of the policies. The cross-purchase contract is more often used in practice. In the case of a book value approach, the formula generally does not use gross book value. On the contrary, the formula would allow owners to make certain adjustments to book value to better reflect the actual road value of the business relative to the fully depreciated book value. Adjustments are typical: the valuation of depreciated assets taking into account the stock of receivables, the actual stock (as opposed to the accounting stock), favourable rental conditions as assets of the company, potential liabilities, work in progress that has not been settled and the valuation of certain important assets. Homeowners can minimize the potential inconvenience of an exponential increase in the number of policies by creating a separate or confident partnership for the purchase of life insurance policies.