What are investor/sharholder rights regarding the sale of a company?

UPDATED: Sep 20, 2012

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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


FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 10 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.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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