Case Study Russia Ltd owns 40% of the shares of Samoa Ltd, and holds the only substantial block of shares in that entity; no other party owns more than 3% of the shares. The annual general meeting of Samoa Ltd is to be held in one month’s time. Two situations that may arise are: • Russia Ltd will be able to elect a majority of Samoa Ltd’s board of directors as a result of exercising its votes as the largest holder of shares. As only 75% of shareholders voted in the previous year’s annual meeting, Russia Ltd may have the majority of the votes that are cast at the meeting.
Case Study
Russia Ltd owns 40% of the shares of Samoa Ltd, and holds the only substantial block of shares in that entity; no other party owns more than 3% of the shares. The annual general meeting of Samoa Ltd is to be held in one month’s time. Two situations that may arise are:
• Russia Ltd will be able to elect a majority of Samoa Ltd’s board of directors as a result of exercising its votes as the largest holder of shares. As only 75% of shareholders voted in the previous year’s annual meeting, Russia Ltd may have the majority of the votes that are cast at the meeting.
• By obtaining the proxies of other shareholders and, after meeting with other shareholders who normally attend general meetings of Samoa Ltd and convincing these shareholders to vote with it, Russia Ltd may obtain the necessary votes to have its nominees elected as directors of the board of Samoa Ltd, regardless of the attendance at the general meeting.
Required
Discuss the potential for Samoa Ltd being classified as a subsidiary of Russia Ltd
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