Question

There are 250,000 Shares of Common Stock Outstanding Given the Following;

A Corporation Authorized 500,000 Shares of Common Stock.
The Corporation Issued 200,000 Shares of Common Stock.
The Corporation then Purchased 50,000 Shares of that Common Stock.
- True
- False

Answer 1

True, Investors 1 and 2 together hold 38,000 shares, which is less than the required majority to control the company's decisions. To change the top management, a group including at least the three largest shareholders is needed. Investors 1 and 2 cannot always ensure their influence without additional support.

Step-by-step explanation:

The question pertains to the ownership and control of a corporation through its stock shares. Specifically, it requires an understanding of how shareholders can influence company decisions, based on the number of shares they own.

In the Darkroom Windowshade Company scenario, investor 1 and investor 2 together hold 38,000 shares out of 100,000, which is less than the majority. To change the company's top management, one would need over 50% of the votes, which equates to more than 50,000 shares. Therefore, the minimum number of investors needed to achieve this would include the two largest shareholders plus at least the third largest shareholder to surpass the 50% threshold.

If investors 1 and 2 decide to vote together, their combined 38,000 shares do not constitute a majority. Hence, they cannot be certain of always getting their way in company operations and would need additional support from other investors to have a controlling vote.