Oneal Wants to Buy a Computer Software Sales Business Being

Essay

Oneal wants to buy a computer software sales business being carried on by Softstuff Inc. The corporation has two classes of shares, common shares which vote, are entitled to receive dividends and the remaining property of the corporation on dissolution, and Preferred Shares which do not vote but are entitled to an annual dividend of 10 percent of the issue price and to receive the amount invested in return for the Preferred Shares. Dividends on the Preferred Shares must be paid before any dividends are paid on the common shares. Also, no payment on dissolution can be made to the holders of the common shares until full payment is made to the holders of Preferred Shares. Clay holds all of the 10 000 issued common shares. All of the 500 hundred issued Preferred Shares are held by Clay's mother. Can Oneal buy this business by buying all of the common shares of the corporation from Clay?