Legal Definitions - sale-of-business doctrine

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.