Certified Valuation Analyst (CVA) Practice Exam

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Which of the following would likely represent a controlling interest in a company?

Owning 10% of shares
Owning 51% of shares
Owning 30% of shares
Owning 60% of shares

The correct answer is: Owning 51% of shares

Owning 51% of shares represents a controlling interest in a company because it provides the shareholder with the majority of voting rights, enabling them to influence or direct major business decisions and policies. This level of ownership ensures that the shareholder can outvote any opposing interests and effectively control the board of directors. In the context of the other ownership percentages, even owning 60% grants control, but it is the threshold of 51% that is crucial because it is the minimum needed to secure a majority in most corporate governance scenarios. Conversely, owning 10% or 30% of shares does not provide enough voting power to exert control effectively, and while owning 60% allows for significant influence, it goes beyond the necessary amount to establish control. Thus, the 51% ownership is the definitive mark for achieving a controlling interest.