Section 356.141

Title XXIII CORPORATIONS, ASSOCIATIONS AND PARTNERSHIPS

Chapter 356

Effective - 28 Aug 1986   

  356.141.  Disqualifying event, corporation may purchase its own shares, procedure. — 1.  Upon the death of a shareholder in a professional corporation, or if a shareholder in a professional corporation becomes a disqualified person, or if shares of a professional corporation are transferred by operation of law or court decree to a disqualified person, then the shares of such deceased shareholder or of such disqualified person may be transferred to a qualified person and, if not so transferred, shall be purchased or redeemed by the corporation to the extent of funds that may be legally made available for such purchase under sections 356.011 to 356.261, according to the procedures set forth in this section.

  2.  The articles of incorporation or bylaws of the professional corporation may establish a price for or may authorize a procedure to set the price and the terms of purchase of the shares of a deceased shareholder or disqualified person.  The professional corporation, and one or more shareholders therein, also may agree on a price for or a procedure to set the price and the terms of purchase of the shares of a deceased shareholder or a disqualified person by a private agreement in writing, which agreement shall be binding only on the corporation and the agreeing shareholders.  If the articles of incorporation or bylaws do not provide a procedure to set the price and the terms of purchase of shares of a deceased shareholder or disqualified person and if no such private written agreement is in effect as to that shareholder or disqualified person, then at any time after such death, disqualification or transfer, the professional corporation and the personal representative of the estate of a deceased shareholder or the shareholder or transferee may agree as to the price and the terms of purchase of the shares of the deceased shareholder or disqualified person.  If such a price is so agreed upon, payment therefor shall be made by the professional corporation within thirty days, or such other period as the parties may fix by agreement, after the date of the agreement as to the price thereof, upon surrender and endorsement to the corporation of the certificate or certificates representing such shares.  Upon payment of the price established pursuant to the articles of incorporation or bylaws or of the price so agreed to, the deceased shareholder, the disqualified person or the transferee shall cease to have any interest in such shares.

  3.  If the articles of incorporation or bylaws do not provide a price or a procedure to establish the price for the shares and if no private written agreement as to the price for or a procedure to set the price of such shares is in effect, then within thirty days after such death, disqualification or transfer, the professional corporation shall provide to the personal representative of the estate of a deceased shareholder, or to the shareholder or transferee, a balance sheet of the professional corporation as of the latest available date and not more than twelve months prior to the date of death, disqualification or transfer, and a profit and loss statement of such professional corporation for the twelve-month period ended on the date of such balance sheet.

  4.  If the articles of incorporation or bylaws do not provide a price or a procedure to establish the price for such shares, and if no private written agreement as to the price for or a procedure to set the price of such shares is in effect, and if within ninety days after such death, disqualification or transfer the estate of such disqualified person or such disqualified person and the professional corporation do not agree on the price to be paid for such shares, then either the estate, the disqualified person or the professional corporation may file a petition in any court of competent jurisdiction in the county in this state where the registered office of the professional corporation is located requesting that the fair value of such shares be found and determined.  If such petition is filed by the professional corporation, then the estate or disqualified person, wherever residing, shall be made a party to the proceeding as an action against his shares quasi in rem, and a copy of the petition shall be served on the estate or disqualified person in person if a resident of this state, and shall be served by registered or certified mail on the estate or disqualified person if a nonresident.  Service on nonresidents shall also be made by publication as provided by law.  The jurisdiction of the court shall be plenary and exclusive.  The estate or disqualified person shall be entitled to judgment against the professional corporation for the amount of the fair value of the shares as of the date of death, disqualification or transfer upon surrender and endorsement to the professional corporation of the certificate or certificates representing such shares.  The court may order that the judgment be paid in such installments as the court may determine to be fair and equitable in all the circumstances to all parties.  The court may appoint one or more persons as appraisers to receive evidence and recommend a decision on the question of fair value.  The appraisers shall have such power and authority as shall be specified in the order of their appointment, or an amendment thereof.  The judgment shall include an allowance for interest at such rate as the court may find to be fair and equitable in all the circumstances to all parties, from the date of death, disqualification or transfer.

  5.  The costs and expenses of any proceeding brought under this section shall be determined by the court and shall be assessed against the professional corporation; but, upon request of the professional corporation, all or any part of such costs and expenses may be apportioned and assessed as the court may deem equitable against the estate or disqualified person if the court shall find that the action of such estate or disqualified person in failing to reach an agreement on the fair value of the stock was arbitrary or vexatious or not in good faith.  Such expenses shall include reasonable compensation for and reasonable expenses of the appraisers, but shall exclude the fees and expenses of counsel for and experts employed by any party.  If the court determines that the fair value of the shares as determined materially exceeds the amount that the professional corporation offered to pay therefor, or if no such offer was made, then upon request of the estate or disqualified person, the court in its discretion may award to the estate or disqualified person such sum as the court may determine to be reasonable compensation to any counsel or expert or experts employed by the estate or disqualified person in the proceeding.

  6.  If a purchase, redemption or transfer of the shares of a deceased or disqualified shareholder or of a transferee who is a disqualified person is not completed within twelve months after the death of the deceased shareholder or within six months after the disqualification or transfer, as the case may be, then the shares of the deceased shareholder or disqualified person are automatically cancelled, and the professional corporation shall forthwith record that cancellation of the shares on its books, and thereafter the estate or disqualified person shall have no further interest as a shareholder in the professional corporation other than his, her or its right to payment for such shares or his, her or its right to initiate and pursue a proceeding for determination of the fair value of those shares under this section.

  7.  Shares acquired by a professional corporation pursuant to payment of the agreed price therefor or to payment of the judgment entered therefor, as in this section provided, may be held and disposed of by such professional corporation as in the case of other treasury shares.

  8.  This section shall not be deemed to require the purchase of shares of a disqualified person where the period of such disqualification is for less than six months from the date of disqualification or transfer.

  9.  Any provision regarding purchase, redemption or transfer of shares of a professional corporation contained in the articles of incorporation or the bylaws of the professional corporation, or in any private written agreement relating thereto, shall be specifically enforceable in the courts of this state and shall preempt the right such estate or disqualified person or the professional corporation to bring an action pursuant to this section.

  10.  Nothing contained in this section shall prevent or relieve a professional corporation from paying pension benefits or other deferred compensation for services rendered to or on behalf of a former shareholder as otherwise permitted by law.

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(L. 1986 H.B. 1230)