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Simple English definitions for legal terms
sale-of-business doctrine
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A quick definition of sale-of-business doctrine:
The sale-of-business doctrine used to be a rule that said when a business is sold, the stocks that come with it are not considered securities. However, this rule was rejected by the U.S. Supreme Court in 1985 in Landreth Timber Co. v. Landreth and Gould v. Ruefenacht.
A more thorough explanation:
The sale-of-business doctrine used to be a rule that said when a business is sold, the transfer of stock (ownership) does not count as a transfer of securities (investments). However, this rule is no longer used.
For example, if a company called ABC Inc. was sold to a new owner, and the old owner transferred ownership of the company to the new owner by giving them stock in the company, this used to not be considered a transfer of securities. But now, it is considered a transfer of securities.
This change was made by the U.S. Supreme Court in 1985 in a case called Landreth Timber Co. v. Landreth and its companion case, Gould v. Ruefenacht.
Basically, this means that when a business is sold and ownership is transferred through stock, it is now considered a transfer of securities.