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Well, how much do you think shares in a bankrupt company should be worth? If there's not enough money to go around, someone is going to get left with the short stick.

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I think his point wasn't that someone getting the short stick was illegal, but rather that shares were bought from me without my direct consent.

Company boards can do this from time to time in takeover situations.

Consider: Berkshire-Hathaway bought the entirety of Burlington Northern Santa Fe for a fixed price, negotiated with the BNSF board. They bought it outright and did a merger. They didn't go to each individual shareholder and ask permission. Many shareholders probably weren't even paying attention enough to check in their portfolio.

The alternative is that mergers are impossible and you're stuck with having a 95%-owned subsidiary with its own corporate structure and all the overhead that entails.

(Of course this is prone to abuse. There are laws to protect minority shareholders' rights.)

Did your contract have drag-along rights[1]? I'm certainly no expert, but I think that's quite common. It would be very difficult to sell a company if you had to track down every single shareholder no matter how small their stake. So it's basically a majority rule.

[1] http://www.feld.com/wp/archives/2005/02/term-sheet-drag-alon...

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