stock acquisition

[Guest mab]

Fact scenario:

SH owns 49% of Acme; the ESOP owns 51% of Acme.

If the plan provides that the company, not the trust, must purchase stock when a put is exercised and the company has the right of first refusal on any stock sale, it is not conceivable that the SH will actually become a majority owner after the company has bought back enough stock due to puts and rights of first refusals being exercised?

Am I missing something?

Tx for any insight.

[BeckyMiller]

You are correct. The put language that you have described and the right of first refusal are the basic forms of such provisions as discussed in the IRC Section 4975 regulations and IRC Section 409(h). This potential must be recognized by the plan's fiduciaries.