Given that there are 4,000,000 shares outstanding in a corporation,how many shares will be required for a minority group of shareholders to elect 3 of the 11 members on the board of directors? (Assume cumulative voting required)

Question

Quizplus · Accepted Answer

Cumulative voting allows minority shareholders to cast all their votes for one candidate, giving them a better chance of electing a director. The formula for calculating the number of shares required for a minority group to elect a specific number of directors is:

Total Shares Required = (Number of Directors to be elected + 1) / (Number of Directors + 1) * Total Shares Outstanding

In this case, the minority group wants to elect 3 directors out of a total of 11. Using the formula above:

Total Shares Required = (3 + 1) / (11 + 1) * 4,000,000
Total Shares Required = 0.3333 * 4,000,000
Total Shares Required = 1,333,333.33

Since shares cannot be fractional, the minority group would need to own at least 1,000,001 shares (rounded up) to be able to elect 3 directors. Therefore, the correct answer is B) 1,000,001.

Given That There Are 4,000,000 Shares Outstanding in a Corporation,how