Stock redemption . In a stock redemption, the corporation purchases the shares. The effect of a stock redemption will be to increase the proportional shares of the remaining shareholders. Say that your corporation has four equal shareholders. After the redemption there will be three shareholders remaining.
People often come to consider a buy-sell agreement when they are putting together an estate plan.
But death is not the only time when shareholder-employees leave their business. They also retire. And they sometimes leave a business to go on to other opportunities. A good buy-sell agreement will cover all these contingencies. Neither the shareholders nor the corporation itself is likely to have the resources at this moment to afford a buyout.