On avvo.com, a guest asked the following question: Is it legal to sell a company without
telling the shareholders?
I thought
the answer by Mr. Linscott Roberts Hanson (http://www.avvo.com/attorneys/60068-il-linscott-hanson-1133366.html)
was good enough to share:
Unless there is some sort of agreement
restricting the 50% shareholder's right to sell, requiring notice, first
refusal options, etc., there is nothing illegal about a 50% shareholder selling
his stock to a third party. In so doing,
he has not interfered with the rights of the other stockholders - they are
legally unaffected by his sale. If they
had pre-emptive rights to acquire shares before his sale they still will have
those rights after his sale. Most
corporations are subject to statutory restrictions on so-called "organic
acts" such as merger, sale of the corporation's assets in bulk, amendment
of the corporation charter and so forth.
Usually (not always) these kinds of major changes require a larger than
majority vote - something like a 2/3 vote.
Thus someone acquiring "only" 50% of the stock would lack the
votes to make major changes in the corporation.
Shareholder agreements can be written which
include what are called "tag along" or "drag along"
rights. The former would give the other
shareholders the right to take advantage of the deal the 50% shareholder
negotiated, and have their stock purchased at the same price, while the latter
would give the 50% shareholder the right to force the other shareholders to
sell their shares along with his.
Evidently neither arrangement was in place here.
The most surprising thing about your
question is that someone would be willing to buy a 50% interest without
acquiring the remainder of the stock.
50% is not control, in fact there are court opinions that refer to it as
a minority position. If is unusual that
someone would purchase a minority position.
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