Can a publicly traded company invest in a privately owned corporation?

Asked over 2 years ago - Houston, TX

Can a public traded company invest in a privately owned company for equity?

Attorney answers (3)

  1. Linscott Roberts Hanson

    Contributor Level 13

    1

    Lawyer agrees

    Answered . There is no legal restriction on an investment in a non-public company by one that is publicly held. It happens frequently. Many "start up" owners have in mind to make their company attractive to a large, publicly traded company so they can get acquired. The hard part, of course is creating a company which has true value which will be attractive to an established, publicly traded company.

    Answering your question on AVVO, does not create a lawyer-client relationship between us. I am an Illinois lawyer... more
  2. Nina Yablok

    Contributor Level 12

    Answered . Short answer is yes.

    Longer answer is that each company may have internal guidelines about such investments; and depending on the size of the investment, there may be reporting requirements and standards of reasonableness to be met.

    You don't tug on Superman's cape; you don't spit into the wind; you don't pull the mask off the old Lone Ranger;... more
  3. Robert V Cornish Jr.

    Contributor Level 16

    Answered . It certainly can. However, the officers of the company have a fiduciary duty not to act in their own self-interest.

    The foregoing is not legal advice nor is it in any manner whatsoever meant to create or impute an attorney/client... more

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