Most stock purchases entail a purchase of one hundred percent of the ownership interests in the selling company. The purchaser must ensure that it receives legal title to those ownership interests at closing. With shares of stock, that seems simple. The seller merely delivers the outstanding stock certificates to the purchaser. What if the seller does not have the stock certificates? In that case, the seller should sign an affidavit that the certificates have been lost and new certificates should be issued and signed over by the seller. In the case of a purchase of a limited liability company, there usually are not ownership certificates. Instead, a separate assignment of membership interest should be signed at closing. In addition to making sure that the purchaser receives the ownership interests in the selling company, the purchaser should verify that the seller is, in fact, the one hundred percent owner of the business. This should be done by carrying out a thorough review of the selling company’s stock ledger and corporate record book. By following the above steps, the purchaser can make sure that it receives legal title to all of the ownership in the seller.
If you have any questions about this or any other M&A issue, please contact Glenn Solomon at gsolomon@offitkurman.com or 443-738-1522.
ABOUT GLENN D. SOLOMON
Glenn D. Solomon is a principal at Offit Kurman and has provided counsel to businesses and business owners for more than twenty-five years. He has extensive experience in the purchase and sale of businesses, structuring ownership agreements, and advising companies in financial distress.
ABOUT OFFIT KURMAN
Offit Kurman is one of the fastest-growing, full-service law firms in the Mid-Atlantic region. With over 130 attorneys offering a comprehensive range of services in virtually every legal category, the firm is well positioned to meet the needs of dynamic businesses and the people who own and operate them. Our ten offices serve individual and corporate clients in the Maryland, Delaware, New Jersey, and Northern Virginia markets, as well as the Washington DC, Baltimore, Philadelphia, and New York City metropolitan areas. At Offit Kurman, we are our clients’ most trusted legal advisors, professionals who help maximize and protect business value and personal wealth. In every interaction, we consistently maintain our clients’ confidence by remaining focused on furthering their objectives and achieving their goals in an efficient manner. Trust, knowledge, confidence—in a partner, that’s perfect.
You can connect with Offit Kurman via our Blog, Facebook, Twitter, Google+, YouTube, and LinkedIn pages. You can also sign up to receive Law Matters, Offit Kurman’s monthly newsletter covering a diverse selection of legal and corporate thought leadership content.
MARYLAND | PENNSYLVANIA | VIRGINIA| NEW JERSEY | NEW YORK | DELAWARE | WASHINGTON, DC
