Marcy owned 500 common stock shares in Ready Runners, Inc. According to the stat
ID: 387297 • Letter: M
Question
Marcy owned 500 common stock shares in Ready Runners, Inc. According to the state laws, shareholder approval must be obtained for any mergers of corporations. When Ready Runners, Inc. decided to merge with Joyful Joggers, Inc., there was no consultation of the shareholders. Marcy sued the corporation, claiming Ready Runners shareholders should have been consulted. How would a court rule on Marcy's claim for shareholder approval of the merger?
a. Marcy had a right to vote on a merger because she owned preferred stock.
b. Marcy had no right to vote on a merger because she did not own preferred stock.
c. Marcy no right to vote on a merger because she owned common stock.
d. Marcy had a right to vote on a merger because she owned common stock.
Explanation / Answer
Common stock holders have the right to vote in an organisation unlike preferred stock holders who do not have right to vote . Preferred stock holders can claim their assets but not vote. Here Marcy owns common stock shares and hence has right to vote. Hence the court will accept her claim as she had a right to vote because she owned common stock. The answer is d.