Also known as: net asset · net asset value
Written by attorneys · grounded in primary & secondary sources — see below
The excess of a corporation's total assets over its total liabilities. This figure determines available surplus for distributions and the residual value that shareholders receive upon dissolution after debts are paid.
Nexus Financial issued shares to its three organizers but never commenced operations. After paying modest organizational expenses, a small bank balance remained. The initial directors distributed that balance to the shareholders before filing articles of dissolution.
Nathan Nguyen subscribed for shares in a new manufacturing corporation. The board designated part of the consideration as capital. The remaining amount increased net assets available to support future operations and shareholder claims.
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Nalini Narula served as a director of a closely held corporation. The board approved a share repurchase that reduced net assets below the par value of issued stock. A creditor later sued the directors for authorizing an unlawful distribution.
Natasha Nielsen dissented from a merger and sought appraisal. The court valued the corporation as a going concern. Net assets formed the starting point before any minority discount was considered at the shareholder level.
Nicole Navarro received a cash-out merger offer from the controlling shareholder. The board calculated the corporation's net assets to determine the per-share value. Minority shareholders challenged the offer as unfair because it failed to reflect the full going-concern value.
Noelle North, an officer of a beverage company, diverted a business opportunity to a new entity she controlled. The court measured damages by comparing the corporation's lost net assets with the profits the officer realized. The diversion reduced the residual value available to existing shareholders.
The corporation must distribute any net assets remaining after winding up to the shareholders. Paying debts alone is insufficient once shares have been issued.
A repurchase impairs capital if the funds paid exceed the corporation's surplus, which is the excess of net assets over the par value of issued stock. The board must confirm that net assets will remain sufficient after the transaction.
The statute requires that at least one class or series be entitled to the corporation's net assets upon dissolution to ensure shareholders hold a residual economic interest. Without this authorization the articles are defective.
…elected by Hilton, had entered into the merger agreement in bad faith, primarily because they had given no consideration to the net asset value of the Mayflower shares that were being taken from the minority. Thus, even though Sterling involved a stock-for-stock exchange rather than a payment of cash as was the case in Singer…