Question

"37. Licensees must disclose their interest in a transaction if they own more than this percent of stock in a corporation:

(a) 5%
(b) Any
(c) 10%
(d) 25%"

Answer 1

A minimum of three investors would be needed to change the top management of The Darkroom Windowshade Company, as Investors 1 and 2 combined do not hold a majority. They require the support of at least Investor 3 to ensure they have control over the firm's decisions.

Step-by-step explanation:

The question concerns shareholders and their control over a corporation based on the stock ownership. In the context of The Darkroom Windowshade Company, to change the top management, a majority vote is required. This means more than 50% of the voting power must be in agreement. Since the company has 100,000 shares of stock outstanding, more than 50,000 shares need to be voted in unison to enact such a change. When we look at the number of shares owned by each investor, Investors 1 and 2 combined own 38,000 shares (20,000 + 18,000). However, that alone does not reach the majority. They would need the support of at least Investor 3, who owns 15,000 shares, to surpass the 50% threshold, bringing the voting power to 53,000 shares (20,000 + 18,000 + 15,000). Therefore, a minimum of three investors are needed to change the company's top management. Even if Investors 1 and 2 agree to vote together, they cannot be certain of always getting their way since they do not have the majority without additional support.