Are you saying that Company A is free to divest itself of its assets without compensating shareholders?
what you seem to be saying is that Company A sold its trade secrets to company B. So Company A should have cash as a result of the sale. The shareholders have the value of the trade secrets sold to company B, right? Am I missing something?
Comapny A is free to divest istelf of any and all assets without informing the investor. If the compnay were to dissolve, then the investor would be an unsecured creditor.
Your investor friend got hosed by not paying close attention to what their investment was doing.
Certainly Company A has an obligation to its investors as it were but they can sell their assets in their entirety. They may very well have sold off their previous business as they deemed it a good move to generate capital to explore another opportunity.
If it were me, I would be scheduling a meeting with the CEO of Company A to discuss their plans for the future and how my investment was going to be repaid and how I as an investor would share in the proceeds from the sale of the assets to Company B. I would attent this meeting with competent legal counsel.
It's not nefarious on it's face. But it could be.
That’s an interesting argument. It may be that the corporate by-laws permit such a practice if it is legal in the state where the company is chartered. It sounds like what Company A sold was intellectual property rights but does not intend to cease operations. If it was done with the intention of fleecing the investors the investors may have some legal recourse, but if the proceeds from sale are being held or used for another legit purpose, the investors may have to wait and hope.