In a stock transfer, can Subchapter S Corporation stock be “unretired”?
By Nina Kaufman, Esq.Q.: Can Subchapter S retired stock be un-retired?
A.: Generally, when you have gone through a stock transfer to sell your shares back to a corporation, when you later buy back in to the company ownership, the corporation simply issues new shares to reflect the new purchase.
In an ideal world, when someone sells their shares, they provide their stock certificates representing those shares to the corporation to be cancelled. Then, when you buy back in to the company ownership, you wouldn’t get the exact same piece of paper (stock certificate) handed back to you. Like getting divorced and remarried to the same person, your new anniversary is the date of the remarriage, not the date of the initial wedding.
The SEC’s rules for retiring stocks are quite detailed and tedious, so make sure “retired” is the legally accurate term. Your ability to un-retire stock in the context of a stock transfer depends on your reason for “un-retiring,” so consult with an attorney who knows this area about whether have the right and the ability to proceed with the stock transfer in the way you’re envisioning.
What other law questions do you have about transfer of ownership and closing a business?
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