BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
you own more than 20% of a company’s stock.
|
|
|
you are the president of the company
|
|
|
you use the equity method.
|
|
|
you own more than 50% of a company’s stock.
|
Detailed explanation-1: -A shareholder has controlling interest in a business when he or she owns more than 50% of the company’s voting shares, giving him or her the deciding voice in shareholder meetings and control over company direction. Voting shares allow shareholders to participate, speak and vote in shareholder meetings.
Detailed explanation-2: -A majority shareholder is a person or entity who holds more than 50% of shares of a company. If the majority shareholder holds voting shares, they dictate the direction of the company through their voting power.
Detailed explanation-3: -Shareholder control But in a limited company, having 50% of the shares actually means you have no control at all and neither does the holder of the other 50% of the shares.
Detailed explanation-4: -Over 50%-with this ‘majority shareholding’ you can pass an ordinary resolution. One crucial power that this gives you is the power to pass an ordinary resolution to appoint a new director, or, importantly, dismiss directors (see 8). You therefore have effective control of the management of the company.
Detailed explanation-5: -Understanding a Controlling Interest However, a person or group can achieve a controlling interest with less than 50% ownership in a company if that person or group owns a significant portion of its voting shares, as not every share carries a vote in shareholder meetings.