Common use of Number of shareholders Clause in Contracts

Number of shareholders. Each po- tential current beneficiary of the ESBT, as defined in paragraphs (m)(4)(i) through (vi) of this section, is counted as a shareholder of any S cor- poration whose stock is owned by the ESBT. During any period in which the ESBT has no potential current bene- ficiaries, the ESBT is counted as the shareholder. A person is counted as only one shareholder of an S corpora- tion even though that person may be treated as a shareholder of the S cor- poration by direct ownership and through one or more eligible trusts de- scribed in section 1361(c)(2)(A). Thus, for example, if a person owns stock in an S corporation and is a potential cur- rent beneficiary of an ESBT that owns stock in the same S corporation, that person is counted as one shareholder of the S corporation. Similarly, if a hus- band owns stock in an S corporation and his wife is a potential current ben- eficiary of an ESBT that owns stock in the same S corporation, the husband and wife will be counted as one share- holder of the S corporation.