Joseph A. McCahery and Erik P. M. Vermeulen
- Published in print:
- 2008
- Published Online:
- January 2009
- ISBN:
- 9780199203406
- eISBN:
- 9780191707780
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199203406.003.0008
- Subject:
- Law, Company and Commercial Law
This chapter examines the significance of diverse patterns of ownership and control for regulating conflicts between majority and minority shareholders. It explores arguments for and against the ...
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This chapter examines the significance of diverse patterns of ownership and control for regulating conflicts between majority and minority shareholders. It explores arguments for and against the regulation of related party transactions. It examines the Parmalat scandal and the mechanisms employed by the family-controlling shareholders to extract private benefits of control at the expense of minority shareholders and creditors. The legal rules and institutions designed to regulate related party transactions are analysed and discussed. The chapter looks at the legal mechanisms used to hide identity of the beneficial owner and critically assess the efforts of international bodies to pierce through the corporate veil. It concludes by assessing the important insights explored here and discussing the various reforms that policy-makers may wish to consider when approaching the regulation of related party transactions and beneficial ownership.Less
This chapter examines the significance of diverse patterns of ownership and control for regulating conflicts between majority and minority shareholders. It explores arguments for and against the regulation of related party transactions. It examines the Parmalat scandal and the mechanisms employed by the family-controlling shareholders to extract private benefits of control at the expense of minority shareholders and creditors. The legal rules and institutions designed to regulate related party transactions are analysed and discussed. The chapter looks at the legal mechanisms used to hide identity of the beneficial owner and critically assess the efforts of international bodies to pierce through the corporate veil. It concludes by assessing the important insights explored here and discussing the various reforms that policy-makers may wish to consider when approaching the regulation of related party transactions and beneficial ownership.
Luca Enriques, Gerard Hertig, Hideki Kanda, and Mariana Pargendler
- Published in print:
- 2017
- Published Online:
- March 2017
- ISBN:
- 9780198739630
- eISBN:
- 9780191837982
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780198739630.003.0006
- Subject:
- Law, Company and Commercial Law
This chapter centers on a technique that managers and controlling shareholders may use to divert value from the corporation: related-party transactions. These transactions range from traditional ...
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This chapter centers on a technique that managers and controlling shareholders may use to divert value from the corporation: related-party transactions. These transactions range from traditional self-dealing to more subtle forms of potential misappropriation of company value, such as compensation agreements, intercompany guarantees, insider trading, and the usurpation of corporate opportunities. Despite the potential for abuse, related party-transactions provide countervailing economic benefits and are rarely outlawed. Instead, the representative “core jurisdictions” employ a variety of legal strategies to police them, including: applying affiliation strategies through disclosure requirements and dissolution rights; intervening on agent incentives by requiring disinterested board approval; granting decision rights to shareholders; and imposing legal constraints such as prohibitions, the duty of loyalty, and the special regime of group law. The chapter concludes by analyzing the effectiveness of the different approaches to related-party transactions in core jurisdictions in view of their enforcement, and their relationship to the underlying ownership structures.Less
This chapter centers on a technique that managers and controlling shareholders may use to divert value from the corporation: related-party transactions. These transactions range from traditional self-dealing to more subtle forms of potential misappropriation of company value, such as compensation agreements, intercompany guarantees, insider trading, and the usurpation of corporate opportunities. Despite the potential for abuse, related party-transactions provide countervailing economic benefits and are rarely outlawed. Instead, the representative “core jurisdictions” employ a variety of legal strategies to police them, including: applying affiliation strategies through disclosure requirements and dissolution rights; intervening on agent incentives by requiring disinterested board approval; granting decision rights to shareholders; and imposing legal constraints such as prohibitions, the duty of loyalty, and the special regime of group law. The chapter concludes by analyzing the effectiveness of the different approaches to related-party transactions in core jurisdictions in view of their enforcement, and their relationship to the underlying ownership structures.
Asish K. Bhattacharyya (ed.)
- Published in print:
- 2016
- Published Online:
- December 2016
- ISBN:
- 9780199469321
- eISBN:
- 9780199087532
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199469321.001.0001
- Subject:
- Business and Management, Corporate Governance and Accountability
The Companies Act 2013 (hereafter, the act) and the revised code of corporate governance issued by the Securities and Exchange Board of India (SEBI), incorporated in Clause 49 of the Equity Listing ...
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The Companies Act 2013 (hereafter, the act) and the revised code of corporate governance issued by the Securities and Exchange Board of India (SEBI), incorporated in Clause 49 of the Equity Listing Agreement, have incorporated global best practices in corporate governance. The book provides an understanding of different facets of corporate governance to enable readers to appreciate the changes brought in by the act and Clause 49. This book will be of interest to those who will either implement the new law or will study the changes in corporate governance practices that will occur with the implementation of the new law. This book is not a collection of research papers. It primarily includes articles that critically examine important provisions of the Companies Act 2013 and revised clause 49 in the light of the insights available from the review of the available literature. The discussions in the book are primarily from the business management perspective. Eminent scholars working in the area of corporate governance have contributed articles for this volume. The volume covers the following issues: evolution of corporate governance, the ‘comply or explain’ approach, executive compensation, related-party transactions, gender diversity on Indian boards, ethical business, independent directors, audit, audit committee, corporate governance in state-owned enterprises, and corporate social responsibility. Thus, the volume covers a wide spectrum of issues related to corporate governance.Less
The Companies Act 2013 (hereafter, the act) and the revised code of corporate governance issued by the Securities and Exchange Board of India (SEBI), incorporated in Clause 49 of the Equity Listing Agreement, have incorporated global best practices in corporate governance. The book provides an understanding of different facets of corporate governance to enable readers to appreciate the changes brought in by the act and Clause 49. This book will be of interest to those who will either implement the new law or will study the changes in corporate governance practices that will occur with the implementation of the new law. This book is not a collection of research papers. It primarily includes articles that critically examine important provisions of the Companies Act 2013 and revised clause 49 in the light of the insights available from the review of the available literature. The discussions in the book are primarily from the business management perspective. Eminent scholars working in the area of corporate governance have contributed articles for this volume. The volume covers the following issues: evolution of corporate governance, the ‘comply or explain’ approach, executive compensation, related-party transactions, gender diversity on Indian boards, ethical business, independent directors, audit, audit committee, corporate governance in state-owned enterprises, and corporate social responsibility. Thus, the volume covers a wide spectrum of issues related to corporate governance.
Geoff O’Dea, Julian Long, and Alexandra Smyth
- Published in print:
- 2012
- Published Online:
- March 2021
- ISBN:
- 9780199665921
- eISBN:
- 9780191932762
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/oso/9780199665921.003.0005
- Subject:
- Law, Company and Commercial Law
Whilst a scheme of arrangement is a court-sanctioned process, any company that proposes a scheme to its members or creditors or is otherwise involved with the scheme (for example, as a bidder in a ...
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Whilst a scheme of arrangement is a court-sanctioned process, any company that proposes a scheme to its members or creditors or is otherwise involved with the scheme (for example, as a bidder in a takeover offer that is affected by way of a scheme of arrangement) must consider whether the corporate action at the centre of the scheme is governed by other applicable laws and regulations. These laws will include the laws of the country of its incorporation and, where the shares of the company are publicly listed, the rules of the relevant market or markets.
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Whilst a scheme of arrangement is a court-sanctioned process, any company that proposes a scheme to its members or creditors or is otherwise involved with the scheme (for example, as a bidder in a takeover offer that is affected by way of a scheme of arrangement) must consider whether the corporate action at the centre of the scheme is governed by other applicable laws and regulations. These laws will include the laws of the country of its incorporation and, where the shares of the company are publicly listed, the rules of the relevant market or markets.
