21 yr old stock-co. won't respond

[rwillia2]

my mother has 50 shares of a 22yr old private (I believe)co., that she found in her late husbands papers. She thinks she remembers that he paid $5,000 in 1979. While searching the net I came across a document stating that the company had revenues of $1,000,000 in 1998, so I have a good idea they're doing some business still. I called and talked to the president of the company a couple days ago and he "hemmed and hawwed" a little, whined a little about how the FDA had jerked them around until 1994 about something, and they still haven't recovered from the initial 4-5 years of business. He said he would fax co. financial statement that same day and I still haven't heard from him. What can I do to get him to accomodate me as a Shareholder and how can I get him to buy back the stock?
thanks all

 

[lawrat]

I am a law school graduate. WHat I offer is mere information, not to be construed as forming an attorney client relationship.

You have a right as a shareholder to inspect the books. IF you aren't given that chance, you can bring a derivative suit against the company.

Contact a corporate law attorney in your state to at least speak about possible action plans.

Try attorneypages.com. If that doesn't work, call your state bar association and ask for lawyer referral.

 

[ALawyer]

This presents so full a series of issues that it would make a wonderful law school exam question, were law schools that practical.

First, I would try to get a sense of what the business of the company is really like. That possibly can be obtained from its website, or promotional material, or indusrtry directories, or Dun & Bradstreet or other credit reports, etc.

If the CEO promised to send you material about the company and has not, why not follow up with him -- and confirm your request, and his promise -- in a letter?

Second, I would want to get a sense of exactly what it is that the certificate for 50 shares represents. Was it 50 shares of 500 originally outstanding shares (a 10% interest in the business) or 50 of 50,000,000?

Also, if it was for 50 original shares, has the company undergone any stock splits or share dividends? If so, what originally was 50 shares could now be 500, 5,000, 50,000 or 500,000 shares.

And apart from the percentage of the original shares, have there been more shares issued later on that dilutes the interets in the business? One place to check would be to look at any possible amendments to the original certificate of incorporation and that would be in the Office of the Secretary of State of the state of incorporation of the firm.

As far as getting the CEO or firm to buy back your shares, that's a whole bunch of new issues.

Companies have no obligation, apart from contractual ones they may have agreed to, to buy back any shareholder's shares. But if they buy back some shareholders shares they may incur a duty to many shareholders. If the company is not publicly traded, your shares are "illiquid" and there is not much you can do, except find someone in the company who wants to buy them, or become become a burr under the saddle, or a pain in the a--, so the management concludes it is worth getting rid of you and thus offers to buy them back.

Then the question is price.