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December 23, 2024 Clouds | 9°F
The 193rd General Court of the Commonwealth of Massachusetts

Section 12: Purchase or redemption of shares by corporation; contingencies; time

Section 12. (a) It shall be provided in the articles or organization or by-laws of a professional corporation, or in an agreement binding upon all of its shareholders, that the corporation shall redeem all of the shares of a shareholder upon the occurrence of any one or more of the following events, unless the provisions of section thirteen apply or said shares are transferred to a qualified person within twelve months after occurrence of the event:

(1) If such shareholder dies;

(2) If such shareholder is determined to be disqualified to render professional service for a period of six months or more;

(3) If such shareholder is determined, in the manner set forth in the applicable instrument, to be incompetent or permanently disabled so as to be unable to render any professional services on behalf of the corporation;

(4) If any of the shares of such shareholder are transferred voluntarily or by operation of law to a disqualified person; or

(5) If any other event specified in the Articles of organization or by-laws or said shareholder agreement shall occur.

(b) The redemption of shares shall take place within twelve months after the occurrence of any of the events described in subsection (a), unless a shorter time is specified in the articles of organization, by-laws or said shareholder agreement. The consideration for such redemption shall be an amount equal to the fair value of such shares on the date of said event, unless otherwise provided in the articles of organization, by-laws or said shareholder agreement. In lieu of such redemption, all the shares of such shareholder may be transferred to a qualified person within such twelve month period.

(c) If a redemption or transfer of any shares of a professional corporation is not completed within the prescribed time period, such shares may be cancelled by the corporation and the holder shall have no further interest or rights of a shareholder of the corporation other than the right to receive an amount equal to the fair value of his shares under subsection (b), unless otherwise provided in the articles of organization, by-laws or said shareholder agreement.

(d) Nothing herein shall affect the obligations of a professional corporation to a shareholder whose interest in the corporation is terminated hereunder with respect to compensation, benefits or other matters accrued prior to his termination or disqualification.

(e) During the pendency of a redemption or transfer hereunder of the shares of a shareholder who is deceased, disabled or incompetent, said shares may be voted by the personal representatives of such shareholder.