Adjustment securities refer to the stocks and bonds issued by a new corporation to shareholders during a corporate reorganization. These securities are typically exchanged for the stock that shareholders held in the original corporation prior to the reorganization. The primary aim of adjustment securities is to remove from market calculations the stocks and bonds that are not available for public purchase.
Adjustment securities are commonly encountered in corporate law, particularly during mergers and acquisitions or when companies undergo significant restructuring. Legal professionals may deal with adjustment securities when advising clients on the implications of corporate reorganizations. Users may find relevant forms and templates on platforms like US Legal Forms to assist in managing these legal processes.
Here are a couple of examples of abatement:
Example 1: A company undergoing a merger may issue adjustment securities to its shareholders in exchange for their original shares, allowing the new entity to streamline its capital structure.
Example 2: In a hypothetical example, if Corporation A reorganizes and creates Corporation B, shareholders of Corporation A might receive adjustment securities from Corporation B as part of the reorganization process.
| Term | Definition | Differences |
|---|---|---|
| Adjustment Securities | Stocks and bonds issued during corporate reorganization. | Specifically tied to corporate restructuring. |
| Convertible Securities | Debt or preferred stock that can be converted into common stock. | Can be converted into equity, not necessarily tied to reorganization. |
If you are a shareholder involved in a corporate reorganization, it is important to understand the implications of receiving adjustment securities. Consider consulting with a legal professional for personalized advice. You can also explore US Legal Forms for templates that may assist you in navigating the related legal processes.
Browse our library of 85,000+ state-specific legal templates.
Adjustment securities are stocks and bonds issued to shareholders during a corporate reorganization, typically in exchange for their original shares.