Legal Definitions - assented stock

Assented stock refers to shares of a company whose owners have formally agreed to a specific corporate action or proposal. This agreement, or "assent," typically occurs in situations like mergers, reorganizations, or significant changes to the company's structure, where shareholders might otherwise have the right to object or receive different treatment. By assenting, shareholders indicate their approval of the proposed terms and agree to be bound by them.

• Example 1: Corporate Merger

  Imagine "Horizon Tech Inc." is merging with "Innovate Solutions Corp." The merger agreement proposes that shareholders of Horizon Tech Inc. will exchange their existing shares for shares in the new combined entity. Before the merger can proceed, a certain percentage of Horizon Tech's shareholders must approve this exchange. Shareholders who formally agree to swap their shares under the proposed terms hold assented stock.

  Explanation: These shareholders have explicitly agreed to the merger terms, consenting to give up their old shares for new ones in the merged company, rather than, for instance, demanding a cash payout or exercising dissenters' rights.

• Example 2: Capital Restructuring

  "Global Manufacturing Co." is undergoing a financial restructuring to optimize its capital structure. As part of the plan, the company proposes to its preferred shareholders that they convert their preferred shares into common shares at a specified ratio. This conversion would give them a stake in the company's future growth but might alter their dividend priority. Preferred shareholders who vote in favor of this conversion and agree to the terms hold assented stock.

  Explanation: By agreeing to convert their preferred shares to common shares, these shareholders have assented to a fundamental change in the nature of their investment, supporting the company's restructuring plan.

• Example 3: Bankruptcy Reorganization Plan

  "Urban Retail Group" has filed for bankruptcy and is proposing a reorganization plan to its creditors and shareholders. The plan includes issuing new shares to existing shareholders, but at a significantly diluted value, as part of a broader strategy to attract new investment and emerge from bankruptcy. Shareholders who vote to approve this reorganization plan, accepting the terms for their existing equity, hold assented stock.

  Explanation: In this scenario, shareholders have assented to a plan that directly impacts the value and structure of their ownership, agreeing to the proposed terms rather than opposing the reorganization or seeking alternative remedies.