Also known as: widely-held corporation · widely held corporations · widely-held corporations · publicly held corporation · public corporation
Written by attorneys · grounded in primary & secondary sources — see below
A corporation with many scattered shareholders, no one of whom owns more than a small fraction of the corporation’s voting stock.
Wolverine Steel faces indictment in federal district court for regulatory violations. Its shares are held by thousands of investors across mutual funds and pension plans, with no single holder exceeding a small percentage. The company must file the required ownership statement identifying any parent and any publicly held corporation owning ten percent or more of its stock.
Woodridge Manufacturing maintains thousands of dispersed public shareholders after a secondary offering. A minority investor seeks to block a proposed merger that benefits only the largest block holder. The court treats the company as widely held and applies a lower level of scrutiny to the transaction than it would in a close corporation.
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Whitestone Bank has widely dispersed ownership among institutional investors. Controlling shareholders attempt a selective stock repurchase that excludes smaller holders. The court refuses to impose the strict equal-opportunity duty that applies in closely held entities and instead permits the transaction under business judgment review.
Watershed Pharmaceuticals faces a hostile bid while its shares trade among thousands of public investors. The board adopts a repurchase program to counter the offer. The court applies the range-of-reasonableness test rather than the stricter scrutiny used when a single shareholder or cohesive group holds control.
Wren Wright’s investment fund acquires shares in a widely held target corporation subject to state takeover legislation. The statute imposes procedural hurdles on the bidder. The Supreme Court evaluates whether the law unduly burdens interstate commerce given the dispersed ownership base of the target.
Walter Washington serves on the board of a widely held bank whose shares are held by numerous institutional investors. The bank suffers massive losses from unchecked subsidiary activity. The court measures the director’s oversight obligation against the standards applicable to public companies rather than the more intimate duties in close corporations.
Any nongovernmental corporate party must file a statement identifying any parent corporation and any publicly held corporation that owns ten percent or more of its stock, or state that no such corporation exists. The requirement applies regardless of how widely the shares are held. The statement enables the court to screen for conflicts of interest.
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The rule still requires identification of any parent and any publicly held corporation owning ten percent or more of the party’s stock. Mutual funds that meet the threshold must be disclosed. The statement need not trace indirect interests behind the funds themselves.
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A supplemental statement must be filed promptly if required information changes. Courts expect reasonable diligence in the initial review of corporate records. A good-faith but incomplete initial filing followed by prompt supplementation after further investigation ordinarily avoids sanctions.
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…which take place across state lines, even if wholly outside the State of Illinois. A tender offer for securities of a publicly held corporation is ordinarily communicated by the use of the mails or other means of interstate commerce to shareholders across the country and abroad. Securities are tendered and transactions closed by…