Presented below are different cases relating to various investors. Discuss and justify whether each investor has the power to direct the relevant activities of its respective investee. You may assume. unless otherwise stated. that the voting rights in each investee are used by the investors to elect members onto the investee's board of directors or to direct the relevant activities of the investee. a) Petro acquired 240 (80%) of the ordinary shares of Salt and 160 (40%) of its N class shares. Each ordinary share carries 1/2 voting tight and each N share carries 1 voting right. b) Petunia acquired 40% of the ordinary shares of Sam. Each ordinary share carries 1 voting The remainder of the voting rights in Sam are held by two individuals that are independent of Petunia. c) Polly acquired 20% of the ordinary shares of Sun. A further 60% of the ordinary shares of Sun are owned by Interim (Polly holds 70% of the shares in Intern*. d) Press acquired 20% of the voting rights in Slim. Press is a government institution and in accordance will local laws. it can elect 7 of the 13 directors on Slim's board of directors. e) Present can cast 80% of the voting rights in Shadow. Present casts its votes at general meetings of Shadow's shareholders in a manner agreed upon with Twin (another entity). f) Pop is sugar retailer in KwaZulu Natal. It had acquired 80% of the voting lights in Sweet. a Western Cape based sugar retailer. Sweet wants to expand its operations by opening a sugar factory in Pietermaritzburg (the capital city of KwaZulu Natal). Pop has since successfully used its voting rights to stop this expansion from taking place. g) Ping is a computer manufacturer in Gauteng. It had acquired 60% of the voting rights in Sahara an importer of computers based in Gauteng). Half of Ping's voting rights in Sahara are only effective when voting on existing transactions that could adversely impact the inventory of Ping. Sahara proposed an agreement where it would import cheap computers from the Far East. Ping made use of all of its voting rights to block this transaction. h) Pepper owns 410 of 1 000 voting rights available in Spice. Pepper also owns options to purchase a further 600 Spice shares. Other parties collectively own 400 options to purchase Spice shares. Options on Spice shares are considered substantive. i) Paste owns 200 (20%) of the voting rights in Stick and 300 of its convertible debentures. Each convertible debenture can be converted into two ordinary voting shares at the next animal general meeting of Stick shareholders. If the debentures are not converted. then each investor will receive their initial investment plus 10%. The market price of a share in Stick at the date of the annual general meeting is expected to be R50. The cost of Paste's investment in Stick's debentures was 8120 (per debenture). Other parties hold 200 debentures in Stick, which they had purchased at an average cost of R95 per debenture.
Presented below are different cases relating to various investors. Discuss and justify whether each investor has the power to direct the relevant activities of its respective investee. You may assume. unless otherwise stated. that the voting rights in each investee are used by the investors to elect members onto the investee's board of directors or to direct the relevant activities of the investee.
a) Petro acquired 240 (80%) of the ordinary shares of Salt and 160 (40%) of its N class
shares. Each ordinary share carries 1/2 voting tight and each N share carries 1 voting right.
b) Petunia acquired 40% of the ordinary shares of Sam. Each ordinary share carries 1 voting
The remainder of the voting rights in Sam are held by two individuals that are independent of Petunia.
c) Polly acquired 20% of the ordinary shares of Sun. A further 60% of the ordinary shares of
Sun are owned by Interim (Polly holds 70% of the shares in Intern*.
d) Press acquired 20% of the voting rights in Slim. Press is a government institution and in
accordance will local laws. it can elect 7 of the 13 directors on Slim's board of directors.
e) Present can cast 80% of the voting rights in Shadow. Present casts its votes at general
meetings of Shadow's shareholders in a manner agreed upon with Twin (another entity).
f) Pop is sugar retailer in KwaZulu Natal. It had acquired 80% of the voting lights in Sweet.
a Western Cape based sugar retailer. Sweet wants to expand its operations by opening a sugar factory in Pietermaritzburg (the capital city of KwaZulu Natal). Pop has since successfully used its voting rights to stop this expansion from taking place.
g) Ping is a computer manufacturer in Gauteng. It had acquired 60% of the voting rights in
Sahara an importer of computers based in Gauteng). Half of Ping's voting rights in Sahara are only effective when voting on existing transactions that could adversely impact the inventory of Ping. Sahara proposed an agreement where it would import cheap computers from the Far East. Ping made use of all of its voting rights to block this transaction.
h) Pepper owns 410 of 1 000 voting rights available in Spice. Pepper also owns options to
purchase a further 600 Spice shares. Other parties collectively own 400 options to purchase Spice shares. Options on Spice shares are considered substantive.
i) Paste owns 200 (20%) of the voting rights in Stick and 300 of its convertible debentures.
Each convertible debenture can be converted into two ordinary voting shares at the next animal general meeting of Stick shareholders. If the debentures are not converted. then each investor will receive their initial investment plus 10%. The market price of a share in Stick at the date of the annual general meeting is expected to be R50. The cost of Paste's investment in Stick's debentures was 8120 (per debenture). Other parties hold 200 debentures in Stick, which they had purchased at an average cost of R95 per debenture.
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