EXPLAINER: What Twitter could do as privately held company

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If Elon Musk and Twitter get their way, the company will soon be privately held and under his control.

The most obvious immediate change would likely be Twitter's stock being taken off the New York Stock Exchange. The most obvious immediate change would likely be Twitter's stock being taken off the New York Stock Exchange. But the company would also likely get freed from having to give regular updates about its business to U.S. regulators and to Wall Street.

“The biggest distinction is that Musk as an owner would be beholden to his own desires or to his and whatever remaining shareholders are still around, rather than to the wide investor base that it has now,” said Eric Talley, a law professor at Columbia University.The company would still have a board of directors, Talley said. It would also need to still follow state-level corporate governance rules, as well as all applicable tax, environmental and other laws.

Both private and public companies “can do whatever they want, but there will be less blowback for privately held companies because a shareholder can’t complain because there are no other shareholders,” said Harry Kraemer, a former CEO and chairman of Baxter International who is now a professor at Northwestern University’s Kellogg School of Management.

If Musk ends up having other shareholders along with him in Twitter, that could also up the pressure on profits. Talley pointed to a famous case brought against another iconic automaker, Henry Ford, who cut back on dividends to shareholders at one point.

 

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