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Richard and Juan contributed assets for stock in Essential Assets Corporation. Richard owns all 90 shares...

Richard and Juan contributed assets for stock in Essential Assets Corporation. Richard owns all 90 shares of Class A voting common stock and all 90 shares of Class C nonvoting common stock of Essential Assets. Juan owns all 10 shares of Class B voting common stock and all 10 shares of Class D nonvoting common stock of Essential Assets. There are other classes of stock but we are only concerned with Richard and Juan.

a. Does either Richard or Juan or both have control of Essential Assets Corporation? Explain why or why not for each shareholder.

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Answer #1

An entity or person has controlling interest in case it holds >50% of voting pwoer.

In the given case , Class A voting shares = 90 and Class B Voting shares = 10. Class C and Class D shares have been given as non-voting.

Total voting shares are 100 ( 90+10) ; assuming there are no other class of voting shares , Richard has 90% of voting power and Juan as 10%.

Richard has 90% control so Richards has control of Essential Assets Corporation.

Juan has just 10% control so Juan does not have control of Essential Assets corporation as holding %age is less than 50%.

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