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The Outer Limits Of Realization: Weiss V. Stearn And Corporate Dilution, Jeffrey L. Kwall, Katherine K. Wilbur

Faculty Publications & Other Works

The United States Supreme Court's 1924 Weiss v. Stearn decision involved a classic case of corporate dilution. In that case, a corporation ("Oldco') transferred its business to a new corporation ("Newco ') in a transaction in which the Oldco shareholders surrendered all their stock for 50 percent of the stock of Newco (and cash). The transaction diluted the proprietary interest of the Oldco shareholders from 100 percent to 50 percent. Because the Oldco shareholders surrendered control of the enterprise, the 50 percent interest they received in Newco was fundamentally different from the 100 percent interest they had owned in Oldco. …