Final answer:
The 'authorized shares' are the maximum number of shares that can be sold to the public. For the Darkroom Windowshade Company, to change management, shareholders must control 50% of the shares outstanding. Investors 1 and 2 have 38,000 shares and would need at least one more investor to always get their way.
Step-by-step explanation:
Understanding Stock Ownership and Control
The question pertains to the maximum number of shares of capital stock that can be sold to the public. The maximum number is known as the authorized shares, which is the total number of shares that a corporation is legally permitted to issue as stated in its articles of incorporation. Issued shares represent the portion of authorized shares that have been sold to investors, while outstanding shares are those currently held by shareholders, including company officers and insiders but excluding own share repurchases. Lastly, unissued shares are those that have been authorized but not yet sold.
In the case of the Darkroom Windowshade Company, which has 100,000 shares outstanding, we can look at shareholder votes to understand control dynamics within the company. To change the company's top management, more than 50% of the voting rights must be cast in favor of the change. Therefore, accumulating votes from shareholders holding a combined total of more than 50,000 shares would be necessary. Investors 1 and 2 together hold 38,000 shares (20,000 shares + 18,000 shares), which is not enough to guarantee always getting their way since it's less than 50% of the total shares outstanding. They would need the support of at least one more investor, with the minimum being investor 3 with 15,000 shares, to surpass the 50% threshold.