TKO Sporting Goods, Inc. (TKO) is a New York corporation that was formed in January 2005. The
Question:
TKO Sporting Goods, Inc. (“TKO”) is a New York corporation that was formed in January 2005. The TKO certificate of incorporation authorizes the issuance of 100,000 shares of no par value common stock, 100,000 shares of $100 par value 6% cumulative preferred stock, and 500,000 shares of non cumulative $9 no par preferred stock. The certificate of incorporation does not mention preemptive rights. It is now January 2019 and Foreman owns 30,000 shares of the TKO common stock, Ali owns 10,000 shares and Norton owns 35,000 shares. There are no other common shareholders. There is no treasury stock.
Assume that all of the common and preferred stock is issued and outstanding. TKO issued full dividends for all stockholders (common and preferred) in in 2014, 2015, 2016, 2017, and 2018. It has not issued dividends in 2019. The company has $5.3 million in surplus available for the issuance of dividends. The Board votes to issue the entire amount as dividends in December 2019.
i. How much will the common shareholders together receive as dividends?
ii. How much will the $100 par value 6% cumulative preferred stockholders together receive as dividends?
iii. How much will the $9 no?par preferred stockholders together receive as dividends?
Smith and Roberson Business Law
ISBN: 978-0538473637
15th Edition
Authors: Richard A. Mann, Barry S. Roberts