legal-terms finance
Escheat of assets/company due to incompliance
<p>As the term is laid out <a href="https://www.investopedia.com/terms/e/escheat.asp" rel="nofollow noreferrer">here</a>, escheat is typically when assets are unclaimed (often due to death of owner). However, I'm unclear as to where exactly the emphasis is for this term.</p>
<h2>Question</h2>
Is it that it's considered "escheat" due to **any** situation that renders the asset into state stewardship or is it that it's considered "escheat" because the assets have no rightful owner due to natural occurrences and therefore the state can assume ownership?
<br>
<h3>Example</h3>
Due to extreme misappropriate of funds or other blatant malfeasance, authorities render a financial institution defunct and disbands the entire board and or management. A regulator then assumes stewardship of the company, so the company still exists but it's not being run with commercial intentions per se. Would this be "escheat" in that if it were not for the regulator, the company would be ownerless? If not, then what is this?

<p>It sounds more like this institution is in receivership.</p>
<p>Even if the government is effectively controlling, the institution, the customers' funds are still in the institution's accounts, so those funds have not escheated.</p>
<p>The funds would be considered to have escheated if the institution transferred them into accounts the government owns.</p>

<blockquote>
<p>Is it that it's considered &quot;escheat&quot; due to <strong>any</strong> situation that
renders the asset into state stewardship or is it that it's considered
&quot;escheat&quot; because the assets have no rightful owner due to natural
occurrences and therefore the state can assume ownership?</p>
</blockquote>
<p>It is escheat because the assets have no rightful ownership due to natural occurrences. Mere state stewardship is not escheat.</p>
<blockquote>
<p>Due to extreme misappropriate of funds or other blatant malfeasance,
authorities render a financial institution defunct and disbands the
entire board and or management. A regulator then assumes stewardship
of the company, so the company still exists but it's not being run
with commercial intentions per se. Would this be &quot;escheat&quot; in that if
it were not for the regulator, the company would be ownerless? If not,
then what is this?</p>
</blockquote>
<p>It is not escheat, and the company is not ownerless. The shares may not be worth anything much any longer, but the shares still exist and still have owners. If the shares were cancelled, moreover, that would generally merely vest ownership of the property of the company in the creditors of the company.</p>
<p>This is called a &quot;receivership&quot; which is different from an escheat.</p>
