What are investor/sharholder rights regarding the sale of a company?
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What are investor/sharholder rights regarding the sale of a company?
I work for a company that recently split into 3 companies; 1 parent and 2 fully owned subsidiaries. I have stock options in the parent. The majority stockholder/CEO split the parts of the original company, most likely to be sold off as the subsidiaries. The benefit to him is if one of the subsidiaries sell, he will get all of the cash and will not have to pay any of his investors or other shareholders like those who have stock options. Is this legal loophole legal or does he still have to pay his investors and shareholders if one of the subsidiaries sells?
Asked on September 20, 2012 under Business Law, Utah
Answers:
FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney
Answered 11 years ago | Contributor
The rights and obligations owed to investors and shareholders in a company are ordinarily set forth in the investment agreement and bylaws of the presumed corporation that you have written about. As such, I recommend that you carefully read these documents and afterwards consult with a business attorney as to what rights you have as an investor/shareholder with respect to the corporation code of your state with respect to the pending sale of the company.
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