what advantages does a company achieve when it possesses significant influence owe another company through voting...

what advantages does a company achieve when it possesses significant influence owe another company through voting stock ownership?

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Expert Solution

Controlling interest means having share holding of greater than 50 percent in a company.

Advantages of having a controlling stake in a company:

1)A company who have the majority control in the company have the sweeping power to veto or to overturn the decisions which the existing board members made as they command the majority of the votes of the company. It also gives ownership of operational and strategic decision-making processes.

2)When there is a majority interest in any company, then it gives guaranteed membership in the board of directors of the company. It is quite common for the person having the controlling interest to become chairman of the board of directors of the company.

3)When the company is generating the profits, then the controlling shareholders enjoy the largest rewards share. Such rewards include dividends, retained earnings, share splits, or any of the proceeds which are received by selling the company to the other entity.

4)When there are the controlling shareholders in the company, the management of the company works with more efficiency and effectiveness as controlling shareholders always keeps check on the management and block any mismanagement, which could affect their investments negatively in the company.

ekkarill92 answered 1 year ago

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