Opinion ID: 1596494
Heading Depth: 3
Heading Rank: 1

Heading: Subsidiary

Text: ¶ 9. Keene asserts that the Foundation is a subsidiary of the Academy, and under fundamental corporate law, the Foundation cannot vote its 805 shares in the Academy, the parent company. He cites a number of cases from other jurisdictions noting that Mississippi has little caselaw on this issue. Keene cites Italo Petroleum Corporation of America v. Producers Oil Corporation of America, 174 A. 276, 281 (Del.Chan.1934), an election-of-directors case, for his position that a wholly owned subsidiary should not be permitted to vote its shares in favor of a parent company. ¶ 10. Keene cites Section 79-4-6.31 concerning a corporation's acquisition of its own shares which states: (a) A corporation may acquire its own shares, and shares so acquired constitute authorized but unissued shares. (b) If the articles of incorporation prohibit the reissue of the acquired shares, the number of authorized shares is reduced by the number of shares acquired. Miss.Code Ann. § 79-4-6.31 (Rev.2009). ¶ 11. Keene's argument fails for a number of reasons. First, Section 79-4-6.31 is inapplicable to the facts in this case, as the Academy did not acquire its own shares. Here, individual shareholders chose to transfer their stock in the Academy to the Foundation. The Foundation did not have shares of its own; rather it provided memberships in the Foundation. The Academy is not a member of the Foundation. Second, there is no allegation that the directors of the Academy and the directors of the Foundation were the same. Third, the shareholders ratified the Foundation as a solely owned corporation, not a subsidiary of the Academy. Accordingly, this issue is without merit.