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

Houston, TX |

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

Attorney Answers 3


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; And you don't get legal advice from a free Q&A page on the Internet. The above is a general statement of the law or just my opinion. I am not saying whether it applies to your situation or not because I don't know the details and you’ve not hired me as your attorney.

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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 not licensed to practice in Texas.

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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 relationship.

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