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Principles of Corporate Finance Law [Kõva köide]

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  • Formaat: Hardback, 632 pages, kõrgus x laius x paksus: 234x156x36 mm, kaal: 1080 g
  • Ilmumisaeg: 26-Jun-2008
  • Kirjastus: Oxford University Press
  • ISBN-10: 0199230501
  • ISBN-13: 9780199230501
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Principles of Corporate Finance LawSuurem pilt
  • Formaat: Hardback, 632 pages, kõrgus x laius x paksus: 234x156x36 mm, kaal: 1080 g
  • Ilmumisaeg: 26-Jun-2008
  • Kirjastus: Oxford University Press
  • ISBN-10: 0199230501
  • ISBN-13: 9780199230501
Teised raamatud teemal:
Püsilink: https://www.kriso.ee/db/9780199230501.html
Märksõnad:
This book explores the relationship between law and corporate finance. Corporate finance theory seeks to understand how incorporated firms address the financial constraints that affect their investment decisions by using varied financial instruments that give holders different claims on the firm's assets. Recent scholarship in this area explores precisely how legal mechanisms affect corporate finance and the development of financial markets. The legal environment is crucially important in explaining the choices that companies make about their capital structure.

The book examines the key elements of the legal environment relating to corporate finance in the UK. This evolving environment has just undergone a remarkable period of far-reaching change. This was driven in part by the desire of the UK government to modernize its domestic company law, and in part by policy choices at the EU level which rely heavily on the adoption of new regulation to promote closer integration of European financial markets.

In this book, Eilis Ferran provides a detailed analysis of the technical issues arising from the new UK and European law on corporate finance, and combines this with exploration of the broader policy framework and with cutting edge theoretical and empirical research.
List of Abbreviations xxii
Table of Cases xxv
Table of Legislation xli
Note on the Implementation of the Companies Act 2006 li
I. OVERVIEW
1. The Regulatory Framework
3
Scope of the book
3
Types of company limited by shares
4
The regulatory framework for corporate finance
7
Legislation
8
Internal constitutional instruments
9
Case law
10
Codes and guidelines
11
2. Use and Abuse of the Corporate Form as a Vehicle for Raising Finance and Managing Financial Risk
13
Issues considered in this chapter
13
Distinctive features of the company limited by shares
14
Separate legal personality
14
Lifting the veil of incorporation
16
Limited liability
18
Promotion of entrepreneurialactivity
20
Passive investment
20
Portfolio diversification
21
Cost of capital
22
Transferability of shares
24
Tort liabilities
24
The corporate group
25
The definition of the corporate group for accounting purposes
27
The definition of the corporate group for other purposes
30
Company law and the corporate group: a general overview
31
The corporate group and liability for the debts of insolvent subsidiaries
33
Alternatives to lifting the veil: agency
37
Alternatives to lifting the veil: contractual guarantees
37
Alternatives to lifting the veil: tort claims against other companies
38
Alternatives to lifting the veil: Insolvency Act 1986
39
Is the law on corporate groups deficient?
42
3. Capital Structure—Fundamental Legal, Accounting, and Financing Considerations
49
Scope of this chapter
49
Share capital terminology
49
Accounting for an allotment of shares
51
Characteristics of ordinary shares
53
Dividends
53
Capital gains and risk
53
Voting rights
54
Debt finance terminology
54
Characteristics of simple debt
56
Interest
56
Capital gain and risk
56
Control
57
Hybrid securities in outline
57
Valuation of securities
59
Shares
59
Net asset value
60
Dividend valuation
60
Free cash flow valuation
60
Debt securities
60
Cost of capital
61
Capital structure
62
Sources of corporate finance in the UK
66
Securities markets
68
Efficient capital markets
75
Measuring and assessing financial performance—company accounts
77
Statutory financial disclosure framework for UK companies
78
Additional financial disclosure framework under FSA Disclosure and Transparency Rules
81
Additional financial disclosure framework for other publicly traded companies
82
II. LEGAL CAPITAL
4. Formation of Share Capital
85
Scope of this part
85
Minimum price of individual shares: par values
85
Minimum capital
89
Denomination of minimum capital
93
Is any valuable purpose served by minimum capital requirements?
94
Allotted, issued, and equity share capital
97
Allotted share capital
97
Authority to allot shares
98
Registration of allotment and return of allotments
98
Issued share capital and issued shares
99
Equity share capital
100
Payment for shares
101
Introduction
101
Paid up share capital
101
Called up share capital
102
Cash consideration for shares
102
Shares must not be issued at a discount
103
The no-discount rule and convertible securities
104
The no-discount rule and underwriting commissions
105
Regulation of non-cash consideration for shares
106
Public companies must not accept an undertaking to do work or perform services as consideration for shares
107
Public companies must not accept undertakings to be performed in the future as consideration for their shares
108
Valuation of non-cash consideration for shares in a public company
109
Takeover exemption
111
Mergers exemption
112
Relaxation of the independent valuation requirement by the 2006 amending Directive
112
Liability of subsequent holders
113
Relief from liability
113
Criminal liability for breach of rules relating to payment for shares
115
Share premiums
116
Determining the issue price
116
Treatment of share premiums
116
Permissible uses for share premiums
117
Bonus issues
117
Expenses and commissions on an issue of shares
118
Share premiums and non-cash consideration
118
Group reconstruction relief
119
Merger relief
120
Importance of group reconstruction and merger relief
122
Other reliefs
123
Other capital contributions
123
Stock
123
5. Share Allotments
125
Scope of this chapter
125
Policy arguments and responses
127
Wealth transfers
127
Protection against dilution
129
Distortion of market for corporate control or other unconstitutional behaviour by directors
129
Abuse of majority shareholder power
129
Policy responses
130
Shareholder empowerment under the Companies Act 2006
131
Private company with a single class of shares
131
Authorization by company
132
Statutory pre-emption rights under the Companies Act 2006
134
Pre-emption rights in relation to 'allotments' of 'equity securities': definitions
135
The operation of the statutory pre-emption rights procedure
135
Consequences of non-compliance
138
When pre-emption rights do not apply
138
Disapplication of pre-emption rights: all companies
140
Disapplications for the purposes of making a rights issue or open offer
141
Fractions
141
Overseas shareholders
141
Open offers
144
Disapplications for non pre-emptive offers
144
Disapplication or exclusion of pre-emption rights: private companies
146
Other formalities in relation to share allotments
146
6. Shares
147
The legal nature of a share
147
Incidents of shares: dividends and capital
148
What financial entitlements do investors in shares acquire? The position of holders of ordinary shares
148
Default capital rights of ordinary shares
149
Default dividend rights of ordinary shares
149
What financial entitlements do investors in shares acquire? The position of holders of preference shares
151
Default capital rights of preference shares
152
Spens formula
153
Default dividend rights of preference shares
153
Enfranchisement when preferential dividends are in arrears
154
Payment of accumulated unpaid preferential dividends
155
What financial entitlements do investors in shares acquire? The position of holders of redeemable shares
156
Incidents of shares: transferability
157
Incidents of shares: voting rights
158
The juridical nature of the relationship between a company and its registered shareholders
158
Variation of rights attaching to shares
162
Provision for entrenchment
162
A class of shares
163
A class of shares—some clear cases
163
Golden shares
164
Rights conditional on holding a specified percentage shareholding
165
Shares with different par values
165
Shares on which different amounts have been paid up
165
When class distinctions matter
166
Variation of class rights
166
What is a right attached to a class of shares for this purpose?
167
What is a 'variation' of a right attached to a class of shares?
168
Variation of rights by enhancement
171
The procedure for variation of class rights
172
Voting to alter class rights—a fettered power?
173
Statutory protection of minorities in a class
174
Class rights and reduction of capital
174
Class rights and redemption of shares/share buy-backs
177
7. Maintenance and Reduction of Capital
179
Protection of creditors' interests: introduction
179
Questioning the value of the legal capital doctrine
180
The development of the maintenance of capital regime in the UK
184
Application of the common law rule prohibiting the return of capital to shareholders
185
An unlawful return of capital is ultra vires
187
Gratuitous dispositions to third parties and directors' duties
189
Reduction of capital under the statutory procedures
190
Why reduce capital?
191
Forms of reduction of capital sanctioned by the Companies Act 2006
192
Limitation on use of solvency statement reduction of capital procedure
192
The court approval procedure
192
Special resolution of the shareholders
192
The oversight of the court in respect of creditors' interests
193
The oversight of the court in respect of shareholders' interests
194
General powers of the court
195
Registration
196
Where allotted capital is reduced below the authorized minimum
196
Effect of a court-approved reduction of capital
196
Reduction of capital under the solvency statement procedure: private companies only
197
Special resolution of the shareholders and class consents
197
Solvency statement
197
Contents of solvency statement
198
Sanctions in respect of false solvency statements
199
Registration requirements relating to the solvency statement procedure
199
Effect of a reduction of capital under the solvency statement procedure
200
Exceptional reduction of capital procedures
200
Reduction of capital following redenomination of shares
200
Reduction of capital pursuant to an order of the court
201
Reduction of capital in respect of forfeited or acquired shares
201
8. Share Buy-backs and Redeemable Shares
203
Introduction
203
Arguments for and against allowing companies share buy-back/redeemable share issuance powers
203
To attract external investors
203
To facilitate exit
204
To structure a temporary loss of control
204
To return value to shareholders
204
To give information signals
205
To achieve a target capital structure
205
To expand the range of financing options
206
To buy back redeemable shares at a discounted price
206
To facilitate the organization of employee share schemes
206
To achieve an informal reduction of capital
206
To defend against a takeover or deal with dissident shareholders
207
To stabilize the share price
208
Consideration by review bodies
208
The European dimension
210
General statutory rule in the Companies Act 2006 against a company acquiring its own shares
212
Share buy-backs—authorizations required by the Companies Act 2006
213
Market purchase
214
Ordinary or special resolution?
214
Off-market purchase
215
Other statutory restrictions on the terms and manner of buy-backs
217
Accounting for a share buy-back
218
Treasury shares
220
Buy-back of own shares out of capital: private companies only
221
Statutory modification of contractual matters relating to share buy-backs
224
FSA regulatory requirements relating to share buy-backs
224
Takeover Code implications of share buy-backs
226
The authorizations required for an issue of redeemable shares
226
Other requirements of the Companies Act 2006 relating to redemption of redeemable shares
227
Class rights issues relating to share buy-backs and redeemable shares
228
Share buy-backs and redeemable shares and protection of minorities
228
9. Distributions to Shareholders
231
Investor expectations
231
Dividend policy
232
Dividend policy and market value
232
Dividend policy, information asymmetries, and signalling
233
Dividend policy and agency costs
234
Dividend policy and managerial-shareholder agreement levels
236
Regulation of dividend policy decisions
237
An overview of the regulatory response to agency problems relating to shareholders
237
An introduction to the regulatory response to agency problems in relation to creditors
241
Statutory regulation of distributions
242
What is a 'distribution'?
243
Profits available for distribution
245
Additional requirement for public companies
246
Relevant accounts
247
Choice of accounting regulatory framework
247
Accounting profits and profits available for distribution
248
Generally accepted principles with respect to the determination of realized profits or losses
249
TECH 7/03
250
TECH 2/07
251
Dividend payment procedure
251
Unlawful distributions
252
When is a distribution unlawful?
252
Other restrictions on dividends
254
Liability consequences of unlawful dividends
254
Directors' liability
255
Shareholder liability
256
Directors' claims against recipient shareholders
258
Other issues
259
Scrip dividends
259
Dividend reinvestment plans
259
Intra-group distributions
260
Intra-group dividends and principles of realization
260
Intra-group dividends and dividend blocks
260
Intra-group transfers of assets at an undervalue
261
Reform
262
10. Financial Assistance
267
Prohibition on the giving of financial assistance—some preliminary issues
267
What is 'financial assistance' law?
267
Legislative history
267
Who is protected by the ban?
269
Why is the giving of financial assistance banned?
269
Objections to leveraged takeovers/buyouts
269
Market manipulation
270
Unconstitutional conduct by management
271
Maintenance of capital and 'detriment'
271
Is the ban on the giving of financial assistance justified?
272
Technical problems
272
Policy concerns
273
Outline of the legal framework
275
'Definition' of financial assistance
276
'Financial assistance' is not a technical term
276
Recent cases applying the test of commercial substance and reality
277
Forms of financial assistance that are prohibited
279
Financial assistance given by way of gift-
279
Financial assistance given by way of guarantee or security
281
Financial assistance given by way of indemnity
282
Financial assistance given by way of release or waiver
282
Financial assistance given by way of loan
283
Financial assistance given by way of any other agreement under which the obligations of the person giving the assistance are to be fulfilled at a time when, in accordance with the agreement, any obligation of another party to the agreement remains unfulfilled
283
Financial assistance given by way of novation of, or assignment of rights arising under, a loan or such other agreement
284
Any other financial assistance given by a company the net assets of which are thereby reduced to a material extent
284
Any other financial assistance given by a company which has no net assets
285
Circumstances in which the giving of financial assistance is prohibited
285
An acquisition
286
The ban relates only to an acquisition of shares
286
The ban applies only to public companies and their subsidiaries
287
The status of the company whose shares are acquired
287
The status of the company providing the assistance
288
The acquirer of the shares
288
Must the acquirer be known to the company providing the assistance at the time when the assistance is given?
289
The assisted person—direct and indirect financial assistance
290
The purpose(s) for which financial assistance is given
291
The causal link
291
Mixed purposes
293
Brady v Brady
294
Reversing Brady
295
Examples of a larger or principal purpose
296
Good faith
296
Unconditional exceptions
297
Distributions
297
Bonus issues
298
Other unconditional exceptions
298
Conditional exceptions
298
Exception for money-lending businesses
299
Exception for employee share purchases
300
Criminal sanctions for unlawful financial assistance
301
Civil consequences of unlawful financial assistance
303
The invalidity of the financial assistance transaction
303
Validity of the acquisition of the shares
304
Claims against directors
304
Liability of other parties
305
Accessory liability
305
Recipient liability
307
The tort of conspiracy
307
Disqualification
308
Amending Directive
308
III. DEBT CORPORATE FINANCE
11. Debt Corporate Finance—General Considerations
313
Scope of this part
313
Unsecured lending—overview
314
Overdrafts
316
Term loans
319
Principal
320
Interest
322
Conditions precedent
325
Representations and warranties
326
Covenants
328
Reporting covenants
331
Financial covenants
331
Disposals of assets covenant
333
Change of business covenant
334
Negative pledge covenant
334
Implied covenants
339
Events of default
340
Debt finance and corporate governance
341
12. Secured Debt
347
Advantages of being a secured creditor
347
Economic perspectives on secured debt
349
Policy—dominance of freedom of contract
352
Consensual security interests
353
Grant and reservation—fundamental legal distinctions
354
Security interests are defeasible interests
357
A security interest is an interest in the chargor's property to secure a debt
357
Security on future property
358
The subject-matter of a security interest—forms of property that can be used as security
361
Forms of consensual real security
362
Pledge and lien
363
Mortgage
364
Charges
366
Fixed and floating charges—a comparison of their key features
367
Fixed charges
367
Floating charges
368
The nature of the floating charge
370
Establishing whether a charge is fixed or floating
374
Classification of a charge as fixed or floating and the nature of the secured property—charges on book debts
379
Implications of Agnew and Spectrum for other asset classes
384
Assessment of the post-Spectrum position
387
Crystallization of a floating charge
387
Drafting of automatic crystallization clauses
390
Automatic crystallization and third parties
391
Priority rules for competing interests in the same property
392
Competing interests in tangible personal property
393
Priority rules for competing interests in intangible property
394
Priority of purchase money security interests
395
Registration of charges—outline of requirements
396
Registration requirements—detailed aspects
397
Charges requiring registration
397
Charges on goods
398
Charges on book debts
398
Floating charges
399
Non-registrable charges
399
The registration requirement
400
The role of the registrar and the issue of the certificate of registration
401
Registration and notice
402
Non-registration
402
Late registration
403
Clearing the register—memoranda of satisfaction
404
Modification of registration requirements for financial collateral
404
Reform
404
IV. CAPITAL MARKETS FINANCE
13. Public Offers of Equity Securities
409
Scope of this part
409
Reasons for going public
409
Choice of trading platform
416
Forms of public offer of shares
419
Offer for subscription
419
Offer for sale
419
Placings and intermediaries offers
419
Determining the issue price—underwriting and bookbuilding
420
The current UK regulatory framework in outline
421
European background
422
Official listing—its continuing significance in the UK
424
Regulatory implications of admission to trading on AIM
428
The principle of mandatory prospectus disclosure
429
The operation of the mandatory prospectus disclosure regime
430
When is a prospectus required?
430
Prospectus form and contents
432
Financial information in prospectuses
435
Language in which non-financial prospectus contents are written
437
Supplementary prospectuses
438
Withdrawal rights
438
Prospectus approval
439
Prospectus publication
440
Advertisements, pathfinder prospectuses, and mini prospectuses
442
Enforcement of securities laws regulating public issues and admission to trading—overview
444
Civil liability in the UK for defective prospectuses—rescission of contracts
445
Civil liability for defective prospectuses—compensation claims
449
Potential claimants
450
Persons who can be sued
452
Defences to liability
455
Elements of the claim
456
Causation
456
Investor's knowledge of falsehood
456
Knowledge of falsehood by the persons responsible for the statement
457
Liability for silence
457
Amount of compensation
457
Civil liability for false prospectuses—assessment
459
Administrative sanctions for defective prospectuses
460
Criminal liability for defective prospectuses
461
Public offers of securities by private companies
462
Continuing obligations
465
Obligations derived from the Transparency Obligations Directive
465
Periodic financial reporting obligations
465
Civil liability for periodic financial disclosures
467
Administrative and criminal sanctions
470
Other continuing obligations derived from the Transparency Obligations Directive
471
AIM issuers
472
Obligations derived from the Market Abuse Directive
472
14. International Equity Offerings
475
Introduction
475
Strategies for developing a regulatory framework for international offerings
477
Convergence/equivalence
477
Mutual recognition
479
Regulatory competition
479
Practical initiatives to develop a regulatory framework for international issuance activity
481
IOSCO international disclosure standards for non-financial information
481
IASB international financial reporting standards
483
Adoption of IFRS, especially in Europe
484
US position—from reconciliation to US GAAP to acceptance of IFRS
486
Some mutual recognition agreements
489
Cross-border issuance in the European Economic Area using a prospectus passport
491
Obtaining a passport
491
Lamfalussy and the establishment of the Committee of European Securities Regulators
493
Prospectus liability—a gap in the standardization agenda?
495
Civil liability position under the Transparency Obligations Directive
497
Position of issuers from third countries
498
Cross-border share issuance activity in the EEA without a passport—making use of exemptions
499
Relevant exemptions
500
US securities law and relevant exemptions
501
Regulation S: sales and resales outside the US
501
Offshore transaction
502
No directed selling efforts in the US
502
Substantial US market interest
502
Resales
503
Private placements and Regulation D
503
Disclosure requirements
504
Resales
504
Rule 144A: resales of restricted securities to qualified institutional buyers
504
Criteria for safe harbour
505
Who is a qualified institutional buyer?
505
Eligible securities—the fungibility prohibition
505
Notice to purchaser
505
Available information
506
Liability position
506
Making a public offer and obtaining a listing in the United States—a brief outline of the law relating to foreign issuers
506
15. Corporate Bonds
511
Introduction
511
Law and the development of corporate bond markets in Europe
514
Terms of bonds
515
Interest
516
Maturity
516
Ranking
517
Covenants
517
Conversion rights
520
Structure of bond issues
522
Issuance and trading of bonds
524
Regulation of the issuance process
524
Exchange-regulated markets for bonds
529
Stabilization
530
Bond market transparency—a growing concern
531
EU regulatory intervention to enhance certainty in market transactions involving financial collateral
534
Index 537