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I know there's probably a reason this isn't done, but: could you not create a new, worthless corporation; distribute its worthless shares to the new employee-ow
by derefr 4y ago
I know there's probably a reason this isn't done, but: could you not create a new, worthless corporation; distribute its worthless shares to the new employee-owners; and then have this holding corp acquire EVGA, thus instantaneously inflating the value of the already-held equity to ~EVGA's share price?
- Arainach 4y agoAcquire using what assets? You're proposing fraud.
- derefr 4y agoYou're interpreting "acquire" as "purchase", but "acquire" just means "acquire." You, as the majority shareholders of a company, are perfectly within your rights to give your equity in the corporation you own, to another corporation, as a gift or donation. (Or, if you like, "for consideration" of $1.) And make no mistake, that's already exactly what's being proposed here, in making EVGA an employee-owned corporation: a gift of equity from the current shareholders, to a set of new shareholders. The only difference in what I'm describing is that there's a trust / holding corporation in between the givers and the recipients.
- taneq 4y agoWould the shell company not then owe taxes on the value of the corporation it ‘acquired’, regardless of the dollar value of the acquisition?
- Arainach 4y agoIf you ever think of a financial trick to avoid taxes and say "why couldn't companies do X", the answer without fail is "because it's illegal and you aren't aware of the specific law you're violating". If this was legal all sorts of companies would do this all the time.