Legal Question in Business Law in California

Re: Transfer of Stock

If you are intending that the new entity (which you didn't specify as being an S or C corp?) hold the S corp stock, you should know that, per the IRS, S corporation stock cannot be held by corporations, only by individuals, estates, and some trusts.

If you resubmitted your question specifying what you are trying to accomplish, it is possible there is a solution.

If you are interested in retaining me, you can also contact me through my website at www.incorporatecalifornia.com (licensed in CA & IL).

Re: Transfer of Stock

In general, you can transfer the stock and you would do that by having your corporation adopt a resolution authorizing the purchase, then filling out the back of the share certificate and having the issuing corporation re-issue the shares on a certificate showing the new owner.

HOWEVER, in so doing you will cause the issuer to lose its S corporation status, thus making yourself very unpopular with the holders of the other 70%, and probably subject to suit, since you probably will violate some kind of shareholder agreement restricting the transfer or sale of shares or an agreement to do nothing to cause loss of S status.

So, my advice is don't do it UNLESS you have the assent of the other 70%, and I really doubt they'll give it.