ITPEC IP April 2023 Question 69
ITPEC IP April 2023 — Question 69 of 100
To increase its control over Company D, Company C may acquire additional shares of D. A larger voting share can give the investor greater influence over shareholder decisions and, once sufficient thresholds are reached, control over appointments and corporate policy. Selling shares would normally reduce that influence.
Answer (b)
Why not others:
- (a) selling a portion of shares conflicts with increasing control
- (c) dispatching auditors is an oversight activity and does not itself increase the ownership ratio
- (d) dispatching directors may express existing influence but does not directly increase shareholding as the sentence requires
Key rule: Acquiring voting shares increases ownership and potential control; disposing of them decreases it.
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