What mechanism allows a corporation to buy back a deceased shareholder's stock?

The mechanism that allows a corporation to buy back a deceased shareholder's stock is a stock redemption plan. This type of plan is specifically designed to facilitate the repurchase of shares held by deceased shareholders, ensuring that the company can manage ownership changes smoothly and according to predetermined terms.

In a stock redemption plan, the corporation agrees to purchase the shares from the shareholder’s estate or beneficiaries upon the death of the shareholder. This is particularly advantageous for the company as it maintains control over its ownership structure and provides liquidity for the deceased shareholder's heirs.

The structure of the plan often includes pre-established terms regarding the purchase price and conditions under which the redemption takes place, ensuring that all parties are clear on the expectations and procedures in the event of a shareholder's death. This eliminates potential disputes and market uncertainties.

Other mechanisms, such as shareholder proposals, buy/sell agreements, and cross-purchase agreements, involve different arrangements and do not specifically designate the corporation as the buyer for a deceased shareholder's stock. Instead, they may involve active shareholders or are focused on different scenarios of ownership transfer, which may not suit the specific context of a corporation repurchasing its own shares from a deceased shareholder.