The Rural Voice, 1991-12, Page 18B.J.
:BEAR
GRAIN CO. LTD.
WET BREWERS
GRAIN
can help your
feeding program by:
• providing high quality rumen
by-pass protein
• improving palatability of roughage diets
• extending roughage supply
• replace high cost supplements
Also available
BAKERY MEAL, HOMINY, GLUTEN,
and other single ingredient feeds.
Wishing you the best
of the holiday season.
B.J. BEAR
GRAIN CO. LTD.
Floradale, Ont. NOB 1 VO
(519) 669-1750
can -con
#1 RATED HOG FEEDER— For
the least amount of feed wastage
111
Plastic & Stainless Steel Feeders
• Long-lasting
• Stainless Steel Edges
• Stainless Spill -proof Grit
• 12" Solid Black Plastic
Also Available:
- Rotary Feeders - Dry Sow Stalls
- Farrowing Crates - Filter Eeze Flooring
- Nursery Decks w/plastic feeders
- Plumbing Supplies
At this special time of
the year, we welcome
the opportunity to
thane our customers.
We look forward to
pt. - serving you in 1992.
A division of Steve's Welding
R. R. 1, Newton, Ont. NOK 1R0
519-595-8737
14 THE RURAL VOICE
THE DEPARTING SHAREHOLDER
Family disagreements, financial
difficulties, or appreciation in the
value of farm property, may all
prompt a family member to decide to
leave the family farm. One of the
benefits of incorporating the family
farm is that the corporation can be
structured by means of a shareholder
agreement to facilitate the departure of
a shareholder, officer, or director, with
a minimum of dispute and disruption
to the farm business.
A shareholder agreement is the
best method of not only promoting the
smooth operation of a farm business
from day to day, but also ensuring that
there is a mechanism in place to pro-
vide for the departure of a shareholder.
This mechanism, known as a buy -sell
arrangement, enables a shareholder
who wishes to leave to sell his shares
to other shareholders, and absolve
himself from any further interest in the
corporation. Such a relatively painless
option for withdrawal minimizes the
impact on the corporation and signifi-
cantly reduces the potential of future
legal problems for both the departing
shareholder and the corporation.
Generally, a shareholder agreement
contains a clause which prohibits
share transfers. Therefore, the share-
holders of the corporation may not
transfer their shares, except in accord-
ance with the procedure specified in
the shareholder agreement.
There are, of course, many reasons
why shareholder agreements frequent-
ly prescribe the manner and timing for
the disposal of a shareholder's shares.
First, it is important to the corporation
that it be able to control who will be a
shareholder; a farm corporation may
choose to restrict who are the share-
holders of a family farm operation.
Second, by creating restrictions on
transfer of shares, a corporation can
ensure that each of the shareholders
always has a market to sell his or her
shares; a shareholder will always be
able to sell to the other shareholders of
the corporation. Third, shareholders
of a corporation may wish to require
mandatory share transfers in certain
circumstances; for example, when a
shareholder is no longer willing or
able to contribute to the business, or
when there has been a dispute between
shareholders.
The restrictions on share transfers
in a shareholder agreement are usually
subject to certain exceptions. Parties
to a shareholder agreement may wish
to permit shares to be pledged to
certain lenders (such as a bank) as
security for loans obtained to acquire
the shares. It is also often agreed that
the shareholders should be permitted
to transfer shares to a spouse, to a
child, or to a corporation controlled by
them.
In addition, it is important in a
shareholder agreement that provision
is made to permit the transfer of shares
on death to the shareholders' heirs.
For a family farm corporation, it is
critical for the farmer -shareholder to
not only have a will providing for the
disposition of the shares on his death,
but also a clause in the shareholder
agreement which allows the disposi-
tion of the shares in the corporation to
heirs.
A common buy -sell provision in a
shareholder agreement permits the
transfer of shares on a restrictive basis
pursuant to a "right of first refusal."
This type of agreement represents a
trade-off between the concern of the
shareholders to be able to sell their