hellothere564738 OP t1_iu398jp wrote on October 28, 2022 at 6:01 AM

Reply to comment by [deleted] in ELI5 How can a public company become private? by hellothere564738

So others have control over your property? Damn

Arianity t1_iu39ht4 wrote on October 28, 2022 at 6:04 AM

If they have a majority of shares in the company, yes. Companies have various internal rules (called bylaws) that dictate how decisions by the company are made. Generally speaking, those say if you have a majority, you can make binding decisions. If a minority could hold out, it'd make governing the company kind of impossible (also, it'd mean the minority had control over the majority's property)

There are exceptions/protections (you can't just vote to zero out those minority shares and not pay, for instance), but if you're in the minority of shares you're kind of along for the ride

Skusci t1_iu3av5f wrote on October 28, 2022 at 6:22 AM

Also bylaws for many companies specify at least a 2/3 or more majority to approve things like buyouts, or changes to bylaws (which could then reduce the votes needed for a buyout), but leave routine stuff to an ordinary majority. But they'll always leave some room so that a couple percent can't halt an overwhelming majority.

boring_pants t1_iu3fh3g wrote on October 28, 2022 at 7:24 AM

The company isn't "your property". You own a very very small share in that company. Decisions about the company are taken by the majority owners, not by you, personally.

And if the company decides that "all shareholders will get a chunk of money, and their shares will cease to exist" then that is what is going to happen.

johndburger t1_iu46asr wrote on October 28, 2022 at 12:50 PM

Wait til you hear about zoning laws.

matty_a t1_iu4ln30 wrote on October 28, 2022 at 2:44 PM

Or eminent domain. Or asset forfeiture. Or condo boards. Or HOAs.

urzu_seven t1_iu3iccq wrote on October 28, 2022 at 8:06 AM

The company isn't "your property" and by buying shares you agree to the terms attached to them, which include provisions which allow the majority to decide things like this. The alternative would be tyranny of 1, ANY single person could ruin the business by refusing to allow something to happen. No sane company would issue shares under those circumstances.

SoullessDad t1_iu3wndc wrote on October 28, 2022 at 11:18 AM

Consider another scenario - I buy one share of Ford Motor Company. That doesn’t give me the right to demand a free car or force them to release a new version of my favorite model. Owning stock doesn’t give you full control over the company. It does give you some say in how the company is run, often through voting on the members for the board of directors.

auntanniesalligator t1_iu3xg8v wrote on October 28, 2022 at 11:26 AM

Electing boards of directors who hire the CEO is arguably just as consequential to your investment. Shares aren’t like land or a car, where there is are myriad ways to extract value. The only point in buying a minority stake of shares in a company is to make money on dividends or value appreciation, and if the majority of shareholders think a private sale is the best way to make money, then it’s appropriate that everybody is included.