IC 23-1.5-3-3 Transfer Or Purchase of Shares From Disqualified Persons; Procedure

• Library: Indiana Statutes
• Edition: 2023
• Currency: Current through P.L. 255-2023
• Year: 2023
• Citation: IC 23-1.5-3-3

(a) Whenever:

(1) a shareholder of a professional corporation dies;

(2) a shareholder of a professional corporation becomes a disqualified person;

(3) a charitable remainder unitrust or charitable remainder annuity trust that holds shares of a professional corporation becomes a disqualified person; or

(4) shares of a professional corporation are transferred by operation of law or court decree to a disqualified person;

the shares of the deceased shareholder or disqualified person may be transferred to a qualified person. If the shares are not so transferred, the shares shall be purchased or redeemed by the corporation to the extent of funds that may legally be made available for the purchase, as provided in section 2 of this chapter.

(b) Within five (5) months after such death or thirty (30) days after such a disqualification or transfer, if the price and method of payment for such shares is not fixed or ascertainable by the articles of incorporation or bylaws of the corporation or by private agreement, the corporation shall make a written offer to pay for the shares at a specified price determined by the corporation to be the fair value of the shares as of the date of the death, disqualification, or transfer. The offer:

(1) shall be given to the disqualified person, which, in the case of a deceased shareholder, is the executor, administrator, or heirs at law if there is no executor or administrator; and

(2) must be accompanied by:

(A) a balance sheet of the corporation, as of the latest available date and not more than twelve (12) months before the making of the offer; and

(B) an income statement of the corporation for the twelve (12) month period ending on the date of the balance sheet.

(c) If the fair value of the shares is agreed upon between the disqualified person and the corporation within thirty (30) days after the date of the written offer from the corporation, payment for the shares shall be made upon surrender of the certificate or certificates representing the shares:

(1) within sixty (60) days after the date of the offer; or

(2) at such other time as the parties may fix by agreement.

Upon payment of the agreed value, the disqualified person ceases to have any interest in the shares.

(d) If the disqualified person and the corporation do not agree on the fair value of the shares within thirty (30) days after the corporation's written offer, the following procedures apply:

(1) The disqualified person may make written demand within sixty (60) days after the date of the corporation's written offer that the corporation file a petition in the circuit or superior court in the county where the principal office of the corporation is located, requesting that the fair value of the shares be determined. The corporation shall file a petition under this subdivision within thirty (30) days after receipt of written demand from the disqualified person. If the corporation fails to institute the proceeding as required by this subdivision, the disqualified person may do so within sixty (60) days after delivery of the written demand to the corporation.