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For purposes of control for Section 351, ownership of ______% or more of the voting stock is required.

A) 50%
B) 51%
C) 75%
D) 80%

User SFrejofsky
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1 Answer

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Final answer:

For Section 351, 80% or more of the voting stock is required for control. This is reflected in answer D) 80%. Majority rules typically require just over 50%, and multiple investors would be needed to change a company's top management.

Step-by-step explanation:

For control in the context of Section 351 transactions, an individual or a group needs to own 80% or more of the corporation's voting stock. Therefore, the correct answer to the question is D) 80%.

When addressing similar questions such as the percentage of the vote required to pass most ordinary laws, it's typically 50 percent + 1 vote. However, for certain supermajority requirements, like amendments to the constitution, a higher threshold such as two-thirds or three-quarters of the vote may be needed.

In the scenario provided in the problems section, investors need a majority to change the top management. If investor 1 with 20,000 shares and investor 2 with 18,000 shares vote together, they would hold 38% of the stock, which would not guarantee control as they would not reach beyond the 50% majority threshold required for a general majority rule.

User Joseph Holsten
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