In Re Tesla Motors, Inc. Shareholder Litigation, when can a shareholder be treated as controlling even with less than 50% voting power?

• A. A shareholder is controlling if they dominate the corporation's affairs or the specific transaction so the board cannot exercise independent judgment; factors include influence over the vote, power within the company, board-level conflicts, public signs of outsized influence, and whether they controlled the challenged deal.
• B. Only if they own a majority of voting power.
• C. Only if they appoint the CEO.
• D. Only if they control the board's meeting times.

Answer: (A)

Control can exist without a majority when a shareholder’s practical power to shape decisions is so strong that the board cannot exercise independent judgment, either across the company or in a particular transaction. In Re Tesla, the governing idea is that a person can be treated as controlling if they effectively dominate corporate affairs or a challenged deal, even with less than 50% voting power. The factors that illustrate this control—how much influence they have over votes, their power within the company, any board-level conflicts, public signs of outsized influence, and whether they steered the challenged deal—show that control is about real authority and leverage, not formal ownership alone. The other options miss this nuance: owning a majority is one way to control but is not required; appointing the CEO is only one aspect and not determinative by itself; and controlling the timing of board meetings does not reflect controlling influence over governance or the challenged transaction.