A change in control refers to a situation where ownership of a company shifts significantly, resulting in a new person or entity gaining a controlling interest, typically defined as fifty percent or more of the company's voting shares. This term is often used in corporate law and employment agreements, particularly in clauses that protect executives in the event of such ownership changes.
The term "change in control" is primarily relevant in corporate law and employment law. It is commonly found in:
Users can often manage related legal documents through templates available on platforms like US Legal Forms.
Here are a couple of examples of abatement:
Example 1: A large corporation is acquired by a private equity firm, resulting in the firm obtaining a 70% ownership stake. This constitutes a change in control.
Example 2: If a company's board of directors is replaced entirely by new members not previously part of the board, this may trigger a change in control clause in executive contracts. (hypothetical example)
Examples of state differences (not exhaustive):
| State | Variation |
|---|---|
| California | Specific shareholder approval requirements for changes in control. |
| Delaware | Broad legal definitions and protections for minority shareholders during a change in control. |
This is not a complete list. State laws vary, and users should consult local rules for specific guidance.
| Term | Definition | Difference |
|---|---|---|
| Acquisition | The process of acquiring control over another company. | A change in control can occur without an acquisition if ownership changes significantly. |
| Merger | When two companies combine to form a new entity. | A merger typically results in a change in control, but not all changes in control are due to mergers. |
If you are an executive or shareholder and a change in control is imminent, review your employment contract for any change in control clauses. Consider consulting a legal professional for tailored advice. You may also explore US Legal Forms for templates that can help you navigate the situation effectively.
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A change in control can be triggered by acquisitions, mergers, or significant changes in the board of directors.