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socrateaser, Attorney
Category: Business Law
Satisfied Customers: 38879
Experience:  Retired (mostly)
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I own stock in a privately held Delaware corporation, with

Resolved Question:

I own stock in a privately held Delaware corporation, with dozens of other shareholders/investors. Can I simply ask the owners to buy back my common stock? If they refuse? I just don't want an ownership stake in the corporation any longer.

Thank you in advance for your comments.
Submitted: 7 years ago.
Category: Business Law
Expert:  socrateaser replied 7 years ago.

As a shareholder, you are an owner. If you mean that you want the controlling shareholders to purchase your shares, you can certainly do so. However, they have no legal obligation to purchase those shares back, and they can offer you pennies on the dollar for your investment, unless there are specific repurchase terms and conditions associated with your shares -- which is sometimes the case with private corporations that have illiquid shares.


That's pretty much the limits of your recourse, unless you believe the corporation promoters defrauded you into purchasing the shares -- in which case you could sue for fraud.


Hope this helps.


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Customer: replied 7 years ago.

The stock I currently hold was issued by the corporation because I was the holder of a debenture bond which they converted into X shares of common stock in lieu of repayment, just weeks before the debenture was due. Assuming, for argument's sake, the debenture agreement was silent on the issue of conversion. Would this violate SEC regulations, or other securities laws?


The CEO of the corporation was recently indicted and pled guilty to an assortment of securities violations, which makes the common stock even less attractive at this point.

Expert:  socrateaser replied 7 years ago.
If the debenture wasn't convertable, then the conversion would be in breach of the note agreement, and you have a lawsuit for the breach and for payment of your original note terms.
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