Investment Q: If you own shares in a company facing a buyout? Can you refuse to sell if the majority accepts?

Question

I have an investing Question. Regarding like stocks. I'm new to stocks. But I'm wondering something, if you own shares in a company, and say it faces a buyout?

Can I refuse to sell and remain a shareholder (even if the majority of shareholders accept the deal) and the acquiring company is asking to acquire 100% of shares? Or can they force you out at some point basically sending you a check and telling you you're no longer a shareholder?

Example. Say I had shares in Earthlink and suppose Verizon or AT&T etc. decide to buy out Earthlink. Now suppose the majority of shareholders agree they will sell their shares but I don't agree. If I keep my shares even if the company wants 100% ownership can I remain a shareholder indefinitely until I'm *ready* to sell? Or even asking for more $$$ down the road for my shares? Or can the buyer say "All you will get is this much per share, here's your check which you must accept, or we will tally you as uninterested shareholder" or something?

Answer 1

If they are buying all of the company, then you can't hold onto it. You can refuse to sell your shares -- but it won't mean anything. What will happen is that when the deal is done they will delist the old stock. This means that you can't trade it any more. They will then send a dividend to all remaining shareholders.

I guess that technically, you still own stock in the old company -- but it no longer exists and the shares are worthless.

I'm not sure how liquidating dividends are taxed -- but you may actually end up owing more taxes if you refuse to sell. This is because you pay taxes on the entire amount of dividends -- but only on the capital gains of shares that are sold.

Answer 2

You can't supplant your wishes for the wishes of the majority. After the sale or merger, your stocks will be converted according to the agreement made. You could end up better off when the transfer is made. Sometimes the stock becomes more than twice what it had been worth. If you want, you could then sell.