[geeks] PayPal alternative offering $25 free cash

[Nadine Miller]

Lionel Peterson wrote:
>> From: velociraptor <velociraptor at gmail.com>
>> Date: 2008/05/17 Sat PM 07:08:20 EDT
>> To: The Geeks List <geeks at sunhelp.org>
>> Subject: Re: [geeks] PayPal alternative offering $25 free cash
> 
>> On Sat, May 17, 2008 at 7:23 AM, Lionel Peterson <lionel4287 at gmail.com> wrote:
>>> The company gets first refusal, but the third-party buyer sets the price. It
>>> may very well be that ebay over-paid to such a level that CL choose not to
>>> match it...
>> If you don't write this into the corporate by-laws and stockholder
>> agreements, there is no regulation to require that a privately held
>> security is first offered to the corporation, board of directors, or
>> corporate officers.  Many people run off and write up their corporate
>> by-laws without thinking about the future.  It is possible to amend
>> the by-laws (even after the fact, which *is* legal, though it may be
>> challenged if there is an ongoing legal question when you do it), but
>> most folks don't even do the minimum necessary to keep their
>> corporation at "arms length"--meaning you are really trying to run a
>> company, rather than having a partnership/sole-proprietorship
>> masquerading as a corporation.  Keeping things at arms length makes
>> sure that the corporate veil is not easily penetrated in case of
>> litigation.
>>
>> I got a crash course in this thanks to our business partners in our
>> cell phone business in Silicon Valley.
> 
> Nadine,
> 
> I was going a different way with it - Maybe an example will help:
> 
> If I had shares in my employer which the company felt was worth $10/share, but I found a buyer outside that offered me $30/share, I am obliged to offer the shares to the company, but unless they match the outside offer, I'm under no obligation to sell to the company.
> 
> If I can *only* sell my shares in the company back to the company, then I don't really own the shares, it's more like I'm allowed to benefit from the shares for a while. I once worked at a company (SAIC, after they bought Bellcore) that was a privately-held corporation, and each quarter the shares in the company were priced as the result of an involved calculation based on the price of comprable companies, and you could only sell your shares to the company - at the price they set. The price was set quarterly, and didn't move for three months...

No argument with that point.  My point was the SEC does not regulate 
privately held corporations, and the Corp's board can write whatever 
bylaws they'd like to control what happens to the shares.

Hence, if you *don't* bother to write in a clause controlling the 
disposition of the shares, then you're kind of negating the purpose of a 
privately held corporation in the first place.

In the case of CL, you might want to have a gander at 
blog.craigslist.org; it appears that eBay has been doing some "share 
dilution" of it's own.  CL has filed a counter suit against them due to 
their hijinks.

=Nadine=