My partner was informed last week that her publicly traded company is shutting down, and from my current understanding there was no buy out/merger or bankruptcy filing. Shareholders didn’t vote on it and it is not a single majority owned company (over half company owned by individuals or public companies). I’d like to know the scenarios in which this could happen.
In: Economics
shareholders do not get a say in everything that a company does…..cant veto products; shut down r&d; fire certain level emeployees
One of the answers not mentioned here is the board of directors. Every corporation has this. They effectively are the bosses for the CEO, and are there to “speak” for the shareholders, since on the board, they will typically own a majority of the voting shares of the company. A company wouldn’t agree to “shut down” unless the board of directors was onboard. If they weren’t onboard, they would fire the CEO and put in someone else. So if your partner’s company is shutting down, it’s because the board of directors is in agreement. It also likely means they previously looked for and couldn’t find anyone willing to buy them out.
If the management of a company discovers that the company is no longer a going concern and are not going to be able to pay bills they have to shut down, in many locations it would be illegal to continue trading knowing they wouldn’t be able to pay all their bills.
When you don’t have the cash to continue operations AND you are unable to raise that cash AND you can’t find a buyer for the company, shutting down is not a choice. There is no vote or alternative option.
>… publicly traded company is shutting down, and from my current understanding there was no buy out/merger or bankruptcy filing. Shareholders didn’t vote on it and it…
Shareholders voted on the CEO and the board and gave them the powers to do what’s best for the ~~company~~ investment.
From the sound of it, the CEO decided that the company is losing money (or about to be losing money) and decided to pull the plug ASAP. To workers like your partner, that’s effectively the same thing as the company evaporating overnight, but to the shareholders of the corporation all of the corporation’s assets still exist. To them, firing everybody is simply a way to spend less money keeping the lights on and keeping salaries paid between now and when they have their shareholder meetings to decide how to ultimately disburse all the company’s assets.
same way any other company shuts down. being publicly traded is just a way for them to raise money. If the money is gone and we can’t afford to operate anymore……….you shut down.
Being publicly traded has nothing to do with being a good functioning business.
Typically, something like that would require at least the board of directors to approve and a plan for buying out shareholders. They can’t just make a company disappear and shareholders are left with nothing. Are you sure there wasn’t a bankruptcy or acquisition? What is the company? Having knowledge would allow ability to look into what’s actually going on because how you describe it makes very little sense.
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