Elon Musk: Always A Douche

[grumbler]

So are there any protections for minority shareholders, or are the "1 cent takeover" risks factored into the price of minority positions?

The management of the company has a legal responsibility to act for the benefit of the shareholders.  They cannot act in their own best interests first, else they will have their asses sued off.

[DGuller]

So are there any protections for minority shareholders, or are the "1 cent takeover" risks factored into the price of minority positions?

The management of the company has a legal responsibility to act for the benefit of the shareholders.  They cannot act in their own best interests first, else they will have their asses sued off.

The management is not acting in their own best interests, they are in fact acting in the best interest of 51% of the shareholders.  They better be. 

[grumbler]

So are there any protections for minority shareholders, or are the "1 cent takeover" risks factored into the price of minority positions?

The management of the company has a legal responsibility to act for the benefit of the shareholders.  They cannot act in their own best interests first, else they will have their asses sued off.

The management is not acting in their own best interests, they are in fact acting in the best interest of 51% of the shareholders.  They better be. 

How could selling the company at $0.01 per share be in the interests of any of the shareholders?

[grumbler]

Minority shareholders who think that their shares are being sold for less than they are worth have a statutory right (in the US, anyway) to ask a court to conduct an appraisal review.  The court can then force the buying entity to pay fair market value for those shares.

[OttoVonBismarck]

To clarify—if a company's value is reasonably agreed to be in the range (say a large range) of $15-30 a share, a single shareholder and CEO with 51% of the voting shares cannot legally liquidate the company at $0.01 a share.

They have a lot of discretion and leeway, but not to such a crazy degree. The officers of a company have a legally binding fiduciary interest to 100% of the shareholders, having 51% of the votes is not (in the USA anyway) a way to legally steal the entire investment in the company by minority owners.

If this was legal no one but fools would throw money in as minority investors in closely held firms.

As grumbler said a management team attempting such a heist would face a tidal wave of legal problems.

[DGuller]

How could selling the company at $0.01 per share be in the interests of any of the shareholders?

I own 51% of the venture being sold, and 100% of the company that is acquiring that venture.  I get to go from owning 51% of the venture to owning 100% of it (via a fully-owned subsidiary) for a nominal expense.  I'm the shareholder, and my interests seem to be doing just fine.

[OttoVonBismarck]

How could selling the company at $0.01 per share be in the interests of any of the shareholders?

I own 51% of the venture being sold, and 100% of the company that is acquiring that venture.  I get to go from owning 51% of the venture to owning 100% of it (via a fully-owned subsidiary) for a nominal expense.  I'm the shareholder, and my interests seem to be doing just fine.

Again—not how it works. The minority shareholders have a right to have their fiduciary interests protected.

[OttoVonBismarck]

I'm as far from (any kind) of lawyer as it gets--but even moreso for corporate law, but my understanding is the broad rules are that:

- Controllers in companies, when their actions are ones they have an "interest" in, the law is going to put restrictions on what actions they can take and how they take them. Determining controller status and whether someone has an interest is complex in some scenarios--particularly where a controller is a minority shareholder--there have been legal cases involving both Larry Ellison (Oracle) and Musk (Tesla) in which it was asserted they were effectively controllers of their companies despite not owning anywhere near 51% of voting shares.

- When something must be decided involving interested and disinterested stockholders, i.e. a merger spearheaded by an interested stockholder who is also the controller, the courts are going to want to protect the rights and standing of the disinterested stockholders. I believe typical things that must be done are things like convening a committee representing only the disinterested stockholders and receiving their affirmative vote to move forward--this would stop cold the meme of a 51% controller being able to sell his company at $0.01 a share to a third entity he also controls.

- The courts also allow for actions to stop "oppressive actions" which is a legal term of art by the controller against minority shareholders. Oppressive actions can be things like freezing minority shareholders out of corporate records to which they are entitled to audit etc etc.

- The courts apply something called an "Entire Fairness Test" to some of these matters, that require analyzing whether an action is "Fair Dealing" and whether a transaction is a "Fair Price"

All of this gets complicated and varies from place to place based on where an entity is incorporated and the specifics, and I only understand the vague outlines, but the TLDR is you can't just fuck over minority shareholders and wipe out their entire stake in the company at a $0.01 valuation in most cases, no matter how many voting shares you own.

[DGuller]

How could selling the company at $0.01 per share be in the interests of any of the shareholders?

I own 51% of the venture being sold, and 100% of the company that is acquiring that venture.  I get to go from owning 51% of the venture to owning 100% of it (via a fully-owned subsidiary) for a nominal expense.  I'm the shareholder, and my interests seem to be doing just fine.

Again—not how it works. The minority shareholders have a right to have their fiduciary interests protected.

I know that's not how it works.  I brought up this extreme hypothetical to make a point that just because non-Musk investors on aggregate are minority shareholders doesn't mean that Musk has a cart-blanche to trash Twitter however he sees fit.

[The Brain]

I recently ordered some stuff from Swedish company Elon which sells appliances and stuff. I got a text from the parcel delivery company that informed me "Elon is packing your items". How the mighty have fallen.

[Tonitrus]

Or he really likes you, and you're in for a surprise.

[The Brain]

I've now received it and my shares didn't implode.

[Barrister]

Maybe this is a Canadian-only thing, but I could have sworn that when there's a controlling shareholder, there's a requirement that there needs to be a "majority of the minority" vote in favour.

[Razgovory]

Just checking in: Is Elon Musk still a douche?

[Habbaku]

Sources say yes.