1215

When examining a firm’s ownership structure, it is imperative to examine any super-voting rights by certain classes of shareholders. Which of the following statements concerning these voting rights is most accurate?

A) Super-voting rights by certain classes of shareholders impair the firm’s ability to raise capital for the future.

B) If a company has a significant minority shareowner group, such as a founding family, cumulative voting to elect board members can be a positive factor for shareholders.

C) Firms with a single class of common equity could encourage prospective acquirers to only deal directly with shareholders with the supermajority rights.

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Firms with dual classes of common equity could encourage prospective acquirers to only deal directly with shareholders with the supermajority rights. If the firm has a significant minority ownership group, such as a founding family, use of cumulative voting to elect board members can favor specific interests at the expense of the interests of other shareholders.

1215

Which of the following statements regarding company takeover defenses is CORRECT?

A) Newly created anti-takeover provisions may or may not require stakeholder authorization/approval.

B) The firm’s annual report contains pertinent details concerning takeover defenses.

C) A firm’s proxy is the most likely place to find information about present takeover defenses.

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These provisions may or may not require such approval. In either case, the firm may have to, at a minimum, provide information to its shareholders about any amendments to existing takeover defenses. A firm’s articles of organization are the most likely places to locate information about present takeover defenses.