Which of the following requirements must be met for a redemption to be treated as substantially disproportionate? A. The shareholder must own less than 50% of the outstanding stock (in terms of voting power) after the redemption. B. After the redemption, the shareholder must own less than 80% of his percentage ownership of voting stock prior to the redemption. C. After the redemption, the shareholder must own less than 80% of his percentage ownership of common stock (voting and nonvoting) prior to the redemption. D. All of the above must be met.

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Business

Brynlee

10 May, 23:41

Which of the following requirements must be met for a redemption to be treated as substantially disproportionate? A. The shareholder must own less than 50% of the outstanding stock (in terms of voting power) after the redemption. B. After the redemption, the shareholder must own less than 80% of his percentage ownership of voting stock prior to the redemption. C. After the redemption, the shareholder must own less than 80% of his percentage ownership of common stock (voting and nonvoting) prior to the redemption. D. All of the above must be met.

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Daffodil · Answer 1

the answer is C

Explanation:

why? the redemption is used for marketing to define or even to know how in the future your company reach their economic profit levels, and also to the shareholder benefits, so that's why when the company put on the market the outstanding stock, they decide how many any shareholder could get. they are looking always to increase their own business but if the company say that after redemption you must own less than 80% of his percentage ownership, its not common, nobody could get less even 50% of his own outstanding shares stock.