Legal Question in Investment Law in California

Re: Sale of Assets of Subsidiary

Your question doesn't provide enough information to give a complete answer.

First, was your investment a loan or a purchase of stock? Assuming it was the latter, you probably don't have a clear-cut right to repayment. Stockholders are entitled to dividends (if declared) and to share in left-over assets when a corporation is wound up and liquidated.

Shareholders also have a right to honest and fair conduct by officers and directors of corporations in which they are shareholders. Any conduct that causes losses may be judged by the so-called 'business judgment rule' which exonerates management from personal liability for honest mistakes so long as they used good business judgment (i.e., investigated beforehand, acted reasonably, took only justified risks, etc.).

The salary paid to the CEO does not, by itself, necessarily show mismanagement or violation of the CEO's fiduciary duties. It may only reflect changing fortunes. Does the company have a functioning board of directors? Did it hold stockholder meetings?

Stockholders, including holders of only a minority of the shares, do have substantial rights against directors and officers for certain misconduct. You should probably consult a business attorney. I would be pleased to offer a free initial consultation if you are in Northern California....707-523-4497.