The owner- ship ratio has been altered to Simon holding 20% and Herb III 15% of

Question

The owner- ship ratio has been altered to Simon holding 20% and Herb III 15% of shares in Owner. All shares of the Owner bear equal voting rights. The rest of shareholding is dispersed and held by multiple share- holders, none individually owning more than 5% of equity. Simon has a contractual right to appoint 2 out of 5 members of the Board of Directors of Owner and the Board approves the strategic operational and nancial decisions of the company. Discuss the nature of the relations of Simon and Herb III with Owner

Explanation / Answer

Simon holds 20% shares which mean he holds ownership rights of 20%. Secondly no one else holds as many shares as him making him the highest investor. Except him and Herb III all others can be considered as minor shareholders. Simon's individual voting weighs whooping 20% which can be considered as major proportion contributed by any individual. It is only apt that he has been given right of appointing 2 out of 5 members of Board of Directors.

Herb III is second highest individual enjoying 15% ownership rights. His voting right also plays vital role in decision taking. Simon and Herb III together contributes for 35% of ownership and rest minor shareholders having individual rights of less than 5% each contributes for 65%.

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