Given:
Below information is about Midland petroleum:
Number of directors =15
Shares held by Ms Ramsey and her friends on board = 52001 shares
Shares held by others = 27998 shares
Dissident shareholder ( Mr Clark) holds number of proxies = 32001 Shares
Total number of shares outstanding = 52001 + 27998+32001
= 112000 shares
Firm follows cumulative voting.
Answer :
1) No of directors Mr Clark can be sure of electing = 4 directors
No of votes available with Clark =
number of votes equal to his shares * number of seats to be elected.
= 32001*15
= 480015 votes
Percentage of votes = votes with Clark / total votes
= 480015 / 1680000
= 28.57 %
No of directors that can be elected = 15 * 28.57%
= 4 directors
2) No of votes available with Ramsey and friends = 52001shares * 15
= 780015 votes
Percentage of votes =780015/ 16800000 =
46.43%
Hence no of directors that can be sure = 15* 46.43% = 7 directors
3) on obtaining support of uncommitted shareholders :
Total shares with Clark = 32001 +27998 = 59999 shares
Total percentage of shares = 59999 / 112000 = 53.57%
Hence no of directors that Clark can be sure of having on board = 15*53.57% = 8 directors
Yes he will control the board as out of 15, 8 directors will be his.
4)No of directors to be elected = 9
Shares with Ramsey and her friends = 52001 shares
Shares with Clark = 37001 + (27998/2) = 51000 shares
No of votes with Clark = 51000*9 = 459000 votes
Percentage to total votes = 459000/ (117000*9)
= 43.58%
No of directors he can elect = 9*43.58% = 4 directors
If 9 directors were to be elected and only half of uncommitted shareholders would support, Clark would not get control of the board.
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