Bruges Corporation’s Memorandum of Association authorizes issuance of 3,000,000 shares of common stock. Currently, Bruges has 2,200,000 million authorized and paid up shares and holds 500,000 shares as treasury stock. The firm wishes to raise £20,000,000 for a new unit in South East Asia. Discussions with its investment bankers indicate that the sale of new common stock will net the firm £20 per share.

a. What is the maximum number of new shares of common stock that firm can sell without receiving further authorization from shareholders?

b. Judging by the data given and your findings in part a, do you think the firm will be able to raise the needed funds without receiving further authorization?

c. What must the firm do to obtain authorization to issue more than the number of shares found in part a?