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Divorce proceedings and a shareholder agreement

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Herman Fryar was a shareholder in a small company, Bryan-Barber Realty, Inc. Fryar's ownership was subject to a shareholder agreement stating that he could not sell or otherwise dispose of his stock without the permission of the other shareholders. In divorce proceedings, the court directed Herman to transfer the stock to his wife, Judith. Bryan-Barber subsequently obtained a judgment against Herman and sought to recover his shares. The company claimed that Herman was still the owner of the shares because the shareholder agreement prohibited the transfer of his shares to anyone else, including Judith, without the permission of the other shareholders.

Discuss whether this claim should succeed.

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This solution discusses the Herman Fryar shareholder agreement case.

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The claim will not succeed. The company had a policy that shareholders could not sell or otherwise dispose of their shares without permission of the other shareholders. This was a small company, and the reason for this agreement is to prevent a shareholder from selling their stock to 'anyone.' Basically, the other ...

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