Redemption is a process by which a business may buy back shares in the event those shares are being sold to a third party. Minnesota has default rules for redemption by public corporations, which can be inflexible.
In contrast, a redemption agreement is a contract allowing a business owner to specify the terms of purchasing or transferring shares of their business well before any sale of shares is closed. This way, the ownership of a company will remain certain rather than leave the opportunity for conflict if a shareholder passes away. Unlike the default laws set forth by Minnesota regarding redemption, these agreements offer greater flexibility for each party to compromise on an agreement that is profitable to everyone.