Home AllVehiclesEV Cars Musk trial asks the $2 bln question: Who controls Tesla?

Musk trial asks the $2 bln question: Who controls Tesla?

by thenewz
musk trial asks the $2 bln question: who controls tesla?

Does Elon Musk control Tesla Inc (TSLA.O) or does Tesla control Elon Musk? More than $2 billion hinges on that question as a trial kicks off on Monday. Shareholders allege that Musk used his control of Tesla to force the company in 2016 to rescue SolarCity, saving the solar panel maker – and Musk’s investment in the company – from bankruptcy. The union pension funds and asset managers leading the case want Musk to repay to Tesla the cost of the $2.6 billion deal and to disgorge the profits on his SolarCity stock. If they win, it would be one of the largest judgments against an individual.

The two-week trial in the Court of Chancery in Wilmington, Delaware, will boil down to whether Musk, who owned about 22% of Tesla at the time of the deal, is that rare controlling stockholder who does not hold a majority stake.

“I think it’s going to be very hard for the court to ignore the reality that Elon Musk is Elon Musk and his relationship with Tesla,” said Ann Lipton, a professor at Tulane University Law School.

She said the case might present an unusual situation given Musk’s celebrity status, his personal ties to Tesla board members and those board members’ financial ties to SolarCity.

“Put it all together, and it might be enough to count as a controlling shareholder,” she said.

Few executives dominate their company’s image as much Musk, known for taunting regulators, battling naysayers and personally engaging with his 57 million Twitter followers.

“We are highly dependent on the services of Elon Musk, Technoking of Tesla and our Chief Executive Officer,” said Tesla’s 2020 annual report.

Sorce: https://www.reuters.com/business/autos-transportation/musk-trial-asks-2-bln-question-who-controls-tesla-2021-07-09/

[Total: 0 Average: 0]

Related Articles

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept