Anonymous Share Buying and the Legal Implications in Public Companies

Can you anonymously buy 51 shares of a public company with many accounts? In the U.S. and other Western nations, the answer is no. Once you control a significant number of shares, you must file reports with securities regulators, as governed by the Williams Act. Additionally, most US companies have 'poison pill' provisions to prevent hostile takeovers. This safeguard activates measures that make it incredibly difficult for a hostile acquirer to gain control of the company without offering a fair premium. Furthermore, your purchases may be reviewed by the USDOJ for antitrust purposes and the CFIUS for national security issues. If you fail to file the necessary reports, your purchases could be reversed, and you could face jail time.

Shares and Board Control

Buying a majority stake doesn’t automatically grant special rights. Instead, what you receive from the company is ultimately determined by the board. In the scenario of buying 51 shares, if you want a significant influence over the company’s decision-making process, you would need to become a board member. This usually requires a substantial holding and can trigger the aforementioned 'poison pill' provisions for further protection.

Minority shareholders have no inherent rights to change the board. While having a controlling interest can give you the power to fire the board and hire a new one, it's important to note that the board's primary function is to represent the company, not just the controlling shareholders. Hence, any actions that disadvantage other shareholders—like unreasonably selling the company for a low price—can result in a shareholder derivative lawsuit being issued on behalf of the other shareholders by the company itself.

Data Ownership and Privacy Regulations

While becoming a board member is one way to gain access to 'inner' company data, achieving a high stake, like 51 shares, is challenging. Anything above a 5% stake may require market disclosure. For instance, Norway’s sovereign wealth fund holds significant stakes in companies, often as small as 1.5%, showcasing the vastness of financial markets.

Even without reaching such a high stake, reaching 5% or 10% can trigger reporting requirements. A 'change of control' event, as you might suggest, would attract scrutiny from one or more U.S. government agencies. The SEC is the primary regulator, but the USA DOJ could review your actions under antitrust laws. The CFIUS (Committee on Foreign Investment in the United States) could review and potentially block your purchases if there are national security implications, especially if the deal involves foreign entities or technologies.

International Data Protection

A lot of the data held by companies is subject to various legal protections. For instance, patient records in a hospital are protected under HIPAA, and employee data is often confidential. In Europe, compliance with the GDPR is mandatory, striving to protect the rights and personal data of individuals.

Moreover, the CFIUS has a particular interest in monitoring international mergers and acquisitions, particularly those involving technology. A notable example is the Broadcom - Qualcomm merger, which was scuttled by CFIUS, ostensibly due to concerns over Asian technology transfer.

In conclusion, while it is theoretically possible to buy a significant number of shares anonymously, the legal and regulatory hurdles can be substantial. The focus should always be on transparency, compliance, and the protection of shareholder and consumer rights.