Requirements of private corporations in regards to stock holders.

[Phouglas]

my wife works for a privately owned 1.5 billion dollar company. She had stock in the company rolled over from a previous company.

the principal owners walked away from the company which reduced company debt but apparently made the stock value nothing. I don’t know how it works but that’s what we were told.

it’s been 6 months and we haven’t received any documentation whatsoever in regards to this transaction. It was a substantial amount of money.

what is this private owned company legally required to do in regards to stock holders? Thanks for any help.

 

[Zigner]

What US state?

 

[Phouglas]

What US state?

florida

 

[Taxing Matters]

florida

I think Zigner should have been more specific in what he asked. It's important to know in what state the corporation is organized (incorporated) in this instance, and it's not clear to me whether Florida is the state in which you live or the state in which the corporation is organized.

 

[Phouglas]

I think Zigner should have been more specific in what he asked. It's important to know in what state the corporation is organized (incorporated) in this instance, and it's not clear to me whether Florida is the state in which you live or the state in which the corporation is organized.

sorry, Florida for both. Florida based company and we live in Florida.

 

[Zigner]

I think Zigner should have been more specific in what he asked. It's important to know in what state the corporation is organized (incorporated) in this instance, and it's not clear to me whether Florida is the state in which you live or the state in which the corporation is organized.

Fair enough

 

[LdiJ]

my wife works for a privately owned 1.5 billion dollar company. She had stock in the company rolled over from a previous company.

the principal owners walked away from the company which reduced company debt but apparently made the stock value nothing. I don’t know how it works but that’s what we were told.

it’s been 6 months and we haven’t received any documentation whatsoever in regards to this transaction. It was a substantial amount of money.

what is this private owned company legally required to do in regards to stock holders? Thanks for any help.

It's not a substantial amount of money if the stock is now worth nothing because the company is worth nothing. This is something best reviewed by an attorney, but the reality of things is that if a company goes bust, the stockholders are normally SOL.

 

[Phouglas]

It's not a substantial amount of money if the stock is now worth nothing because the company is worth nothing. This is something best reviewed by an attorney, but the reality of things is that if a company goes bust, the stockholders are normally SOL.

True it was a substatnial amount of money at time of roll over.

and yes I’m not asking whether or not I’m owed money. I’m not stupid. If it’s zero then it’s zero.

If you read my post I’m asking if they are legally obligated to give me documentation outlining what happened specifically.

I’m under the impression publically traded companies have legal obligations to disclose information. What about private companies?

 

[LdiJ]

True it was a substatnial amount of money at time of roll over.

and yes I’m not asking whether or not I’m owed money. I’m not stupid. If it’s zero then it’s zero.

If you read my post I’m asking if they are legally obligated to give me documentation outlining what happened specifically.

I’m under the impression publically traded companies have legal obligations to disclose information. What about private companies?

Before I attempt to answer that, can you explain exactly what you meant by "the principal owners walked away"? Is the company still operating at all or is it just shut down? What kind of transaction did you think happened?

 

[Taxing Matters]

sorry, Florida for both. Florida based company and we live in Florida.

Federal securities laws are largely concerned with requiring certain companies to report detailed financial information to shareholders. These companies are known as reporting companies. All publicly traded companies (those whose shares trade on a public exchange) are reporting companies and some privately held firms are too. For a private firm, how they issue their securities (stocks, bonds, etc) matters when determining whether the company is a reporting company. If your wife's firm is a reporting company, you can get a lot of information about it from the various reports the company must file with the Securities and Exchange Commission (SEC). The SEC makes those reports available now online on its Edgar system. If you are unsure whether the company is a reporting company you normally can search for it by name on that system. Unfortunately at the moment, it appears that feature is not available, but finding reports is still possible if you happen to know other information about the company that the system can still search. Or check back later when the name search function is up again.

Apart from that, your wife's access to information about the company will turn on Florida statute and the terms of the company's charter and bylaws. If your wife does not have a copy of the charter and by-laws she will want to get them from the company. She already has an extensive right to inspect company records as provided by Florida Statute section 607.1602. It is possible, though probably not likely, that the charter and bylaws provide additional rights to information. The charter and bylaws are useful to understand how the company operates and what rights she has.

 

[Phouglas]

Federal securities laws are largely concerned with requiring certain companies to report detailed financial information to shareholders. These companies are known as reporting companies. All publicly traded companies (those whose shares trade on a public exchange) are reporting companies and some privately held firms are too. For a private firm, how they issue their securities (stocks, bonds, etc) matters when determining whether the company is a reporting company. If your wife's firm is a reporting company, you can get a lot of information about it from the various reports the company must file with the Securities and Exchange Commission (SEC). The SEC makes those reports available now online on its Edgar system. If you are unsure whether the company is a reporting company you normally can search for it by name on that system. Unfortunately at the moment, it appears that feature is not available, but finding reports is still possible if you happen to know other information about the company that the system can still search. Or check back later when the name search function is up again.

Apart from that, your wife's access to information about the company will turn on Florida statute and the terms of the company's charter and bylaws. If your wife does not have a copy of the charter and by-laws she will want to get them from the company. She already has an extensive right to inspect company records as provided by Florida Statute section 607.1602. It is possible, though probably, not likely, that the charter and bylaws provide additional rights to information. The charter and bylaws are useful to understand how the company operates and what rights she has.

Thank you for the thoughtful reply.

 

[xylene]

How did you handle this on your 2019 taxes?

I think you need professional help.

 

[Phouglas]

How did you handle this on your 2019 taxes?

I think you need professional help.

Apparently it would affect 2020 taxes. I don’t think the final closure wasn’t until 2020.

 

[zddoodah]

my wife works for a privately owned 1.5 billion dollar company. She had stock in the company rolled over from a previous company.

By saying that she "had stock," does that mean she no longer has it?

the principal owners walked away from the company which reduced company debt but apparently made the stock value nothing.

Not really sure what this means. Did the "principal" owners own a majority of the corporation's outstanding shares? What does "walked away from" mean? Did they sell their shares? Does it only mean they're not involved in the management of the corporation? Were/are they officers and/or directors? Why did this result in "the stock value [becoming] nothing"? One of the prior responses asked about this as well, but you didn't answer.

I don’t know how it works but that’s what we were told.

Told by whom?

it’s been 6 months and we haven’t received any documentation whatsoever in regards to this transaction.

Why would you expect to receive any documentation regarding whatever transaction you're talking about? If the transaction is that one or more major shareholders sold their shares to someone else, that's not something that minority shareholders would necessarily receive any documentation about.

what is this private owned company legally required to do in regards to stock holders?

That's an awfully general question. Even if you limit the question to the vaguely described "transaction" you mentioned (and even if, in fact, the "transaction" is what I guessed it might be), the answer will depend on the corporation's by-laws and the laws of its state of incorporation.

 

[Phouglas]

By saying that she "had stock," does that mean she no longer has it?




Not really sure what this means. Did the "principal" owners own a majority of the corporation's outstanding shares? What does "walked away from" mean? Did they sell their shares? Does it only mean they're not involved in the management of the corporation? Were/are they officers and/or directors? Why did this result in "the stock value [becoming] nothing"? One of the prior responses asked about this as well, but you didn't answer.




Told by whom?




Why would you expect to receive any documentation regarding whatever transaction you're talking about? If the transaction is that one or more major shareholders sold their shares to someone else, that's not something that minority shareholders would necessarily receive any documentation about.




That's an awfully general question. Even if you limit the question to the vaguely described "transaction" you mentioned (and even if, in fact, the "transaction" is what I guessed it might be), the answer will depend on the corporation's by-laws and the laws of its state of incorporation.

I appreciate your engagement but many of these questions remain unanswered because we haven’t been provided any information.

I don’t know if she has any stock any longer.