5 ms·
A company can't pay a dividend to some shareholders but not others. This action would effectively be giving in-the-money call options to some shareholders but n
by repsilat 5y ago
A company can't pay a dividend to some shareholders but not others. This action would effectively be giving in-the-money call options to some shareholders but not others. Probably legal, but pretty dodgy.
- deleted 5y ago[deleted]
- JumpCrisscross 5y ago> company can't pay a dividend to some shareholders but not others But it can sell shares to some and not others [1]. (This was a landmark decision [2].) [1] https://law.justia.com/cases/delaware/supreme-court/1985/493-a-2d-946-9.html https://law.justia.com/cases/delaware/supreme-court/1985/493... [2] https://en.wikipedia.org/wiki/Unocal_Corp._v._Mesa_Petroleum_Co https://en.wikipedia.org/wiki/Unocal_Corp._v._Mesa_Petroleum....
- repsilat 5y agoThanks for the links. Goodness what a mess of a precedent. Having the board ignore a large shareholder would be one thing. Shares give votes, and terms don't turn over every day, and we don't kick out politicians as soon as the polls turn sour on them. Fine. But if a shareholder has enough shares to change the board composition (or just threatens to) the incumbents can just unilaterally decide that the challenger owns a smaller fraction of the company than they bought on the open market? Maybe it's not technically self-dealing, but it's bad.