Question

A firm is using cumulative voting and four director spots are up for election. There are 3.6 million shares outstanding. How many shares must a minority owner own or control to ensure that he or she can gain control of one seat on the board of directors?

Answer 1

Answer:

A minority owner own or control to ensure that he or she can gain control of one seat on the board of directors must have 720001 shares.

Explanation:

Number of shares he must own = Total number of shares/(Number of directors + 1)

= 3.6 million/(4+1) + 1

= 720001

Answer 2

Answer: 720,001 shares

Explanation:

GIVEN the following :

Outstanding shares = 3.6 million

Number of directors = 4

Number of shares a minority must buy to gain control of one seat.

Buy using cumulative voting:

[Number of shares ÷ (number of directors +, 1)] + 1

[3,600,000 ÷ (4 + 1)] + 1

720,000 + 1

= 720,001

The (1) added at the end of the equation is the extra share needed to leap through.

Therefore, the number of shares a minority must buy in other to gain control of one seat on the board of directors is 720,001 shares.