ZAO Snack is a company that operates a popular chain of coffee shops in a large city. The company has grown rapidly but is now looking for additional fi nance to enable further expansion to be achieved.The three main shareholders have approached Vera, a wealthy entrepreneur, to encourage her to invest in the company.Vera has been impressed by the company and the vision of its owners, but has stated that she will only invest subject to certain conditions. Vera has informed the main shareholders that in order to provide the fi nance that is sought by them, she wants to take a minimum equity stake in the company of 10%. She also wants to be guaranteed a minimum annual dividend of 10%, which she notes from the most recent fi nancial accounts and projections would be easily affordable to the company.The main shareholders of the company have agreed to transfer 10% of the total shares in the company to Vera by decreasing their own shareholdings. However, they are concerned about the potential implications of offering her a 10% stake in the company, the minimum fi nancial stake that she requires and the minimum return that she wants the company to provide.Required:
(a) Explain the impact of Vera acquiring a 10% stake in the equity of the company in respect of her ability to infl uence future decisions and actions proposed by the shareholders. (4 marks)
