Legal Definitions - controlled company

A controlled company is a business entity where a single individual, group, or another organization holds enough voting power to direct its management and policies. This level of control typically means they can determine the outcome of shareholder votes, appoint the majority of the board of directors, and make key strategic decisions, even if they don't own 100% of the company.

Here are some examples to illustrate this concept:

• Example 1: Private Equity Acquisition

  A private equity firm, "Global Investments LLC," acquires 65% of the voting shares in a struggling restaurant chain, "DineWell Inc." By holding more than half of the voting stock, Global Investments LLC now has the power to appoint a new CEO, restructure the company's operations, and decide on its future expansion plans, effectively making DineWell Inc. a controlled company.

• Example 2: Family-Owned Public Company

  The founding family of "TechSolutions Corp.," a publicly traded software company, collectively owns 55% of the company's voting shares. Despite other shares being available on the stock market, the family's combined ownership ensures they can approve or reject major corporate actions, such as mergers, significant asset sales, or changes to the company's bylaws, thereby maintaining TechSolutions Corp. as a controlled company.

• Example 3: Corporate Subsidiary

  "MegaCorp Inc.," a large conglomerate, owns 100% of the shares in "Innovate Labs Ltd.," a research and development firm. As the sole shareholder, MegaCorp Inc. has complete authority over Innovate Labs Ltd.'s budget, projects, and personnel decisions. Innovate Labs Ltd. operates as a wholly-owned subsidiary, which is a classic example of a controlled company, with MegaCorp Inc. exercising full control.