Your boss started a construction company as a partnership wi

Your boss started a construction company as a partnership with several other contractors ago. Twelve years later, the partners incorporated to gain access to additional capital by issuing common stock. Forty percent of the shares were sold to the general public and were acquired by the partners. In this way, the partners kept voting control of the business.

Now the company has an opportunity for a major expansion. To obtain additional capital to fund the expansion, the company is considering another stock offering. But the original partners do not want to lose voting control of the business. Your boss knows you are taking college business courses and asks whether there is a way the company can sell additional stock without the partners losing control of the business. Mention the kinds of capital stock the company could issue that would accomplish his purpose.

Solution

SOLUTION:- the company can issue RIGHT SHARES i.e issue of shares to the existing shareholders in proportion of the shares already held by them , in this way rights of the existing shareholders remain intact in the company without any dilution of control.