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A shareholder agreement can also limit a stockholder’s actions after his/her shares are sold. The most important issues that are addressed by shareholder agreements are those that address stock ownership. A shareholder agreement can serve two important purposes with regard to stock ownership— it can control when a stock is sold and to whom. It can also limit a stockholder’s actions after his/her shares are sold.
In order to be enforceable, this provision must be carefully written so as to allow the selling shareholder a reasonable opportunity to make a living and not unduly restrict economic competition.
For more information about other important provisions related to the operation of a business, contact Cartwright Law today.