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MMLU / Rainbow Corporation has outstanding 1,000 shares of voting common stock and…

Problem

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question

Rainbow Corporation has outstanding 1,000 shares of voting common stock and 1,000 shares of nonvoting preferred. The preferred has a liquidation preference equal to its par value of $100 per share plus a 3 percent noncumulative dividend. Rainbow submits to its stockholders a proposal to authorize a new class of preferred stock with redemption rights that would come ahead of the old preferred stock. At a shareholders' meeting, 700 common and 400 preferred vote in favor of the proposal. Which of the following statements is correct?

choices

  1. The proposal is validly approved because overall a majority of the outstanding shares did approve.
  2. The proposal is invalidly approved because a majority of the preferred shareholders did not approve.
  3. The vote of the preferred stockholders does not matter because it was nonvoting stock.
  4. The proposal is invalidly approved because a two-thirds vote of each class is required.

subject

professional_law

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Source and history

task_id
cc832c53-7688-5edc-aaed-800192e02342
task_key
all--test--cc832c53-7688-5edc-aaed-800192e02342
task_revision_id
1
config / split
all / test

Official source

initial import