Shareholder Agreement's Spousal Consent in Right of First Refusal
Full Question:
Answer:
The answer will depend upon the terms of the documents involved, how the property is titled, and will be governed by contract law principles. I suggest you contact a local attorney who can review all the facts and documents involved. For California residents, shareholder agreements often require the spouse of each equity owner to consent in writing to the owner's entering into the shareholders agreement, and to any community property interest of the spouse being bound by the provisions of that agreement. Without a binding spousal consent, the provisions meant to keep all ownership within the family upon the death or divorce of an owner may not be enforceable against the spouse.
The following is an example of a shareholder agreement clause:
6.19
[Consent of Spouse or Registered Domestic Partner. If any Key Holder is married or is a California registered domestic partner on the date of this Agreement, such Key Holder’s spouse or registered domestic partner shall execute and deliver to the Company a consent of spouse or registered domestic partner in the form of Exhibit A hereto (“Consent”), effective on the date hereof. Notwithstanding the execution and delivery thereof, such Consent shall not be deemed to confer or convey to the spouse or registered domestic partner any rights in such Key Holder’s shares of Transfer Stock that do not otherwise exist by operation of law or the agreement of the parties. If any Key Holder should marry, remarry, register, or re-register as a California domestic partner subsequent to the date of this Agreement, such Key Holder shall within thirty (30) days thereafter obtain his/her new spouse’s or registered domestic partner’s acknowledgement of and consent to the existence and binding effect of all restrictions contained in this Agreement by causing such spouse or registered domestic partner to execute and deliver a Consent acknowledging the restrictions and obligations contained in this Agreement and agreeing and consenting to the same. ]
The following is a CA statute governing a spouse's Right of First Refusal in franchises:
BUSINESS AND PROFESSIONS CODE
SECTION 20027
20027.
(a) No franchisor shall deny the surviving spouse, heirs, or
estate of a deceased franchisee or the majority shareholder of the
franchisee the opportunity to participate in the ownership of the
franchise under a valid franchise agreement for a reasonable time
after the death of the franchisee or majority shareholder of the
franchisee. During that time the surviving spouse, heirs, or estate
of the deceased shall either satisfy all of the then current
qualifications for a purchaser of a franchise or sell, transfer, or
assign the franchise to a person who satisfies the franchisor's then
current standards for new franchisees. The rights granted pursuant
to this section shall be granted subject to the surviving spouse,
heirs or estate of the deceased maintaining all standards and
obligations of the franchise.
(b) Nothing in subdivision (a) shall prohibit a franchisor from
exercising the right of first refusal to purchase a franchise after
receipt of a bona fide offer to purchase the franchise by a proposed
purchaser of the franchise.
(c) This article shall not apply to any agreement or contract in
effect prior to January 1, 1984, except an agreement or contract of
an indefinite duration. This section shall not apply to any bequest
or intestate succession that took effect prior to January 1, 1984.
