Reverse mergers are legal. In a Reverse Merger, a private operating company or its business operations are acquired by or merges into a publicly traded shell company. Reverse Mergers can be structured a variety of ways. The end goal is the same – to take a private company or its operations public.
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Yes, they are legal. In fact, there is accepted accounting practices for them known as "reverse acquisition accounting." What has given reverse mergers a bad name is unscrupulous practices by stock promoters.
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