Monkey Business, Inc.’s certificate of incorporation authorizes 10,000,000 shares of common stock. Currently, Alice owns 2,500,000 shares, Brent owns 4,000,000 shares, Cindy owns 1,250,000 shares, Dante owns 1,250,000, and Ellie owns 750,000 shares. The remaining 250,000 shares have not been issued. The company’s board of directors is made up of Brent, Cindy, and Ginger. Brent also serves as the company’s Chief Executive Officer, which manages the following executives:

Melissa, Chief Financial Officer (CFO), who manages a team of 6 people,

Niang, Chief Operations Officer (COO), who manages a team of 10 people, and

Otto, Chief Technology Officer (CTO), who manages a team of 15 people.

The company’s shares are currently valued at $3.50/share.

Questions

1. a) What is the market capitalization of Monkey Business, Inc.?
2. b) Using a sketch, illustrate the corporate structure of Monkey Business, Inc. (include each shareholder’s ownership percentages).
   c) At the company’s next annual shareholder meeting, the shareholders will elect a director for the seat on the board which is currently occupied by Brent. According to the company’s bylaws, the seat will be filled by a majority vote of the shareholders of common stock. Brent is seeking reelection. Dante, a shareholder, is also on the ballot.
3. 1. What is a majority vote? How is it different from a plurality vote?
   2. How many votes must Dante receive to be elected director?
4. 3. In addition to his own, which shareholder’s votes must Dante receive in order to be elected director?
   
   d) Ellie (an early investor with the company) decides to sell all her shares to Ginger for $3.60/share. Rather than permit Ellie to sell the shares to Ginger, the Board of Directors has decided that the company will exercise its right of first refusal. Ellie purchased all her shares during the company’s early stages when its stock price was $1.60/share.
5. 1. What is a right of first refusal? In which corporate document is this right normally outlined?
   2. How much revenue does Ellie make from the sale?
6. 3. Assuming a 15% capital gains tax, how much profit will Ellie make from the transaction?

Answer rating: 100% (QA)

a To calculate the market capitalization of Monkey Business Inc we need to multiply the number of outstanding shares by the current share price Total ... View the full answer