{"data":{"id":"us-ky/krs-274.095","jurisdiction":"us-ky","citation":"KRS 274.095","heading":"Withdrawing shareholders -- Procedure for redemption of stock --","body":"Procedure upon death of sole shareholder -- Insolvency.\n(1) The articles of incorporation may provide for the purchase or redemption of all of\nthe shares of any shareholder within a peri od not to exceed one (1) year after the\ndeath or disqualification to practice the profession of such shareholder, or for the\npurchase or redemption within said time of all of the shares of any shareholder\ndesiring to sell them, all of whom are herein somet imes called \"withdrawing\nshareholders\" or, in default of such provisions in the articles of incorporation, the\nforegoing provisions and time limitation may be included in the bylaws of a\nprofessional service corporation, or, if no such provision and time l imitation is\nmade in the articles of incorporation or bylaws, they may be provided for by such\nprivate agreement or agreements as the shareholders and corporation may enter into.\nIf such an article, bylaw or agreement is adopted or provided for and such st ock is\nnot redeemed by the corporation within said one (1) year period, then within ten\n(10) days following the end of said period the president and/or secretary of the\ncorporation shall give notice thereof to the Secretary of State of Kentucky and, upon\nreceipt of such notice by the Secretary of State, the charter of the corporation shall\nbe immediately void.\n(2) In the absence of such provisions in the articles of incorporation, bylaws or by\nprivate agreement, a professional service corporation shall rede em the shares of a\nwithdrawing shareholder within ninety (90) days after the death or disqualification\nof a shareholder or of the receipt by the corporation of written notice from a\nshareholder that he desires to sell or transfer all his shares of stock in  the\ncorporation upon terms mutually agreeable to the parties. Should a redemption not\noccur within the time limit provided herein, the shares shall immediately be\ncancelled on the books of the corporation and the holder of such shares shall be\nreimbursed as provided in subsection (4) of this section as a general creditor of the\ncorporation.\n(3) If the sole shareholder of a professional service corporation organized pursuant to\nthis chapter dies:\n(a) It shall be the duty of his personal representative to so  notify the Secretary of\nState, whereupon the charter of such corporation shall lapse; or\n(b) The administrator, executor, guardian, conservator, or receiver of the estate of\nthe deceased sole shareholder may amend the articles of incorporation by\nsigning a written consent to such amendment. Articles of amendment to be\nadopted shall set forth:\n1. The name of the corporation;\n2. The amendments so adopted;\n3. The date of adoption of the amendment by the administrator, executor,\nguardian, conservator, or receiver;\n4. The number of shares outstanding; and\n5. The number of shares held by the administrator, executor, guardian,\nconservator, or receiver.\nThe amendment to the articles of incorporation may allow the corporation to\ncontinue as a professional service c orporation or may convert the corporation\nto a private business corporation provided, however, that the corporation shall\nnot render professional services until such time as all outstanding shares are\nheld by qualified persons and the corporation conforms to the provisions of\nthis chapter; or\n(c) The administrator, executor, guardian, conservator, or receiver of the estate of\nthe deceased shareholder shall transfer all outstanding shares of the\ncorporation to other qualified persons or person within the mea ning of this\nchapter. The professional service corporation shall cease to render\nprofessional services until such time as the transfer or transfers provided in\nthis subsection are completed.\n(4) In the absence of an article, bylaw or agreement as provided for in subsection (1) of\nthis section, or a sale as provided for within the time stated in subsection (2) of this\nsection, a professional service corporation, within one hundred eighty (180) days\nafter the death or disqualification of a shareholder or within the same period after\nreceiving written notice from a shareholder that he desires the corporation to\nredeem all of his stock in the corporation, shall institute an equitable action for a\ndetermination of the fair market value of all of the shares of the corporation's\noutstanding stock cancelled pursuant to subsection (2) of this section and owned by\nsuch shareholder.\n(a) The court shall designate a time for a hearing and at said hearing shall a ppoint\na disinterested appraiser to determine the fair market, pre-cancellation value of\nsuch shares. The court shall administer an oath to the appraiser to honestly and\nfaithfully discharge his duties and shall fix a time and place for the appraiser\nto begin hearing evidence on such fair market value. The appraiser shall have\nthe powers conferred upon master commissioners by KRS 31A.010 and shall\nafford a reasonable opportunity to the corporation and the shareholder or\npersonal representative of a deceased  shareholder to introduce pertinent\nevidence on such fair market value. The appraiser shall conduct his hearings\nas expeditiously as practicable, and upon completion of the hearing shall\nreport in writing to the court his determination of the fair market p re-\ncancellation value of such shares and shall file with the court a written\ntranscript of the testimony heard by him, together with all exhibits introduced\nin evidence.\n(b) The corporation or any withdrawing shareholder may, within ten (10) days\nafter the  filing of the appraiser's report, file exceptions thereto. Such\nexceptions shall be heard and decided by the court upon the evidence\nsubmitted to the appraiser as shown by the transcript. After hearing the\nexceptions to the appraiser's report, or if no ex ceptions thereto have been filed\nwithin the time hereinbefore provided for, the court shall enter final judgment\ndetermining such fair market, pre -cancellation value of the shares of each\nwithdrawing shareholder and shall direct payment thereof by the corp oration\nto each withdrawing shareholder and the surrender of the duly indorsed\ncertificate or certificates representing his shares. The court shall be\nempowered to direct payment by the corporation in installments reasonably\ncalculated to avoid any impending corporate insolvency while reimbursing the\nwithdrawing shareholder in as direct a manner as may be practicable.\n(5) If a professional service corporation fails to bring the above provided for action for\nthe redemption of its shares within the time provided, then within ten (10) days after\nthe end of said period, the president of the corporation, or if he be then dead, the\nsecretary thereof, shall so notify, in writing, the Secretary of State of Kentucky, and\nupon receipt of such notice by the Secretary o f State of Kentucky, the charter of the\nprofessional service corporation shall be void.\n(6) If the obligation of the corporation to redeem any shares of its outstanding stock as\nset out in subsections (1) to (5) of this section would render the corporation\ninsolvent and the court has deemed an installment redemption as provided in\nsubsection (4) of this section to be unwarranted, then without delay the corporation\nshall commence to liquidate and dissolve, unless the remaining shareholders shall\nhave prior t hereto purchased or redeemed all of the withdrawing shareholder's\nshares or satisfied such shareholder's claim against the corporation.","path":["KRS Chapter 274"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=13803","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:53:26Z","sha256":"ff96e1afcbe8987a73c7e8b57ea4a32e9d1735c8a4c5d7a0300b1c13a45a9dce","source_id":"us-ky","stale":false,"prev":"us-ky/krs-274.090","next":"us-ky/krs-274.100"},"notice":"GroundRules: Original legal text. Not legal advice."}