Legal Question in Business Law in Arizona

Diluting Stock value in a private corporation

As a result of a divorce, I was awarded approx 1,000,000 shares of stock from my former husband's privately owned corporation. THis was 1/2 the amount that we owned together. My question is this-- how can I prevent my husband's company (family owned) from diluting my shares of stock? Is it possible that they can issues a lot more shares to others which will in turn keep the value of mine down? What can I do to protect the % of the company that I own. Are there laws pertaining to this? For example, if they issue several million more shares of stock, do they have to issue me shares too in order to keep my % owned the same as it is now? Let me know. Thank you.

Asked on 9/22/04, 12:19 am

1 Answer from Attorneys

Jared Simmons Simmons & Gottfried, PLLC

Re: Diluting Stock value in a private corporation

There are laws to protect shareholders as well as language that is generally put into sharholder agreements. Accordingly, to properly answer your question, I would need to review the shareholder agreement, other documentation relating to the entity formation and operations and your divorce decree. Additionally, There may be restrictions on your rights regarding those shares that you should be aware of to prevent possible liability. Please contact my office to discuss in more detail.

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Answered on 9/22/04, 12:43 am

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