Question

Select the false statement about exemptions from take-over bid legislation.

1) The offer is for shares in a private company.
2) The acquisition does not aggregate to more than 5
3) In Ontario, the number of holders of securities subject to the bid does not exceed 50 and the securities held in aggregate are less than two per cent of the outstanding securities of that class.
4) A private agreement between 10 or fewer security holders at a price not exceeding 115

Answer 1

A minimum of three investors are needed to change the company's top management when combining the shares of investor 1, 2, and 3. Investors 1 and 2, even when voting together, cannot always get their way, as they control 38% of shares and need over 50% to assure their influence.

Step-by-step explanation:

The minimum number of investors required to vote to change the top management depends on how many shares collectively represent more than 50% of the total shares, as a majority is usually required to make such a decision. In the case of the Darkroom Windowshade Company, a combination of investors 1 and 2, who have 20,000 and 18,000 shares respectively, would control 38,000 shares out of 100,000, which is not a majority. They would need at least one more shareholder to join them to have the power to change the management. Adding investor 3's 15,000 shares gives them a total of 53,000, which is just over 50%, making the minimum number of investors needed to change management three (investors 1, 2, and 3).

If investors 1 and 2 agree to vote together, they would control 38% of the company. However, they cannot be certain of always getting their way in how the company will be run since they do not have a majority on their own. They would need to form alliances with other shareholders to ensure they have over 50% of the voting power.