Legal Question in Business Law in Utah

I work for a company that recently split into 3 companies. one parent and two fully owned subsidiaries. I have stock options in the parent. The majority stock holder/ceo split the parts of the original company most likely to be sold off as the subsidiaries. The benefit to him is if one of the subsidiaries sell, he will get all of the cash and will not have to pay any of his investors or other shareholders (like those who have stock options). Is this legal loophole legal or does he still have to pay his investors and shareholders if one of the subsidiaries sells?


Asked on 9/20/12, 9:50 pm

1 Answer from Attorneys
Alvin Lundgren Alvin R. Lundgren, L.C.

The answer depends on the by-laws or operating agreements of the parent company. Those agreements govern how the parent company should deal with ownership of the parent company and its subsidiaries. Generally when a parent company splits its assets, the share holders get proportionate shares in the subsidiary. The subsidiaries are still owned by the parent company. When assets of a company are sold the proceeds are divided among shareholders.

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Answered on 9/21/12, 7:09 am


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