Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
39 Cards in this Set
- Front
- Back
|
To bring a derivative suit, share holders must ask the company to carry it our first, if they will not then the shareholders can |
Liability-USA |
|
|
All directors are joint and severally liable, but if a director made the decision in good faith with false information, then they escape liability |
Liability- USA |
|
|
Insolvency because of directors errors can be carried out with full liquidation or reorganization- a deal with creditors for partial payment on debts and the focus of directors shifts to whatever can keep the creditors happy |
Liability- USA |
|
|
Closed Corporations for the US |
-Must not be trading publicly -Has a cap on the number of shareholders 30-50 -Majority shareholders owe fiduciary duty, duty to act in loyalty and good faith and not to oppress minority shareholders |
|
|
US employee protection from the law |
No specific company law, unions are used in some areas to offer protections, but for the majority there is none |
|
|
US Grouped Companies |
Majority shareholders owe a fiduciary duty to minorities to not oppress them or the company |
|
|
US Sinclair case study |
Sinclair oil company owned 97% of Sinven and Sincalir forced the payment of dividends from Sinven, this cause Sinven to have to enter in a poor contract and lose money, the minority shareholders of Sinven filed a law suit and Sinclair was forced to pay all damages. |
|
|
Duty of Care |
Directors must spend time to research and analyze decisions that they're making, if they fail to see potential flaws they can be liable based on the duty of care |
|
|
Duty of Loyalty |
-Directors cannot preform self dealing -Cannot preform ursurpations of a business oppertunity -Cannot engage in competing business with a company |
|
|
Self Dealing
|
A director carrying out a business deal that will benefit him or her over the company , if it benefits the company as well it can be voided and it can be voided if a 3rd party group agrees to it and if the majority shareholders agree on it |
|
|
Usurpations of a business oppertunity |
A director beginning a business opportunity that is in competition with the company he is directing |
|
|
Engaging in competing business practices |
A director working with the competitors of a company |
|
|
6 common definitions of control |
1. a shareholder with over 50% of votes 2. de facto majority 3.Participation in shareholder agreements 4. ability to impose dominant influence because of contracts 5.the power to appoint directors of another company 6. chain of control |
|
|
A shareholder with over 50% of votes |
A shareholder owns over 50% of the voting rights
|
|
|
de facto majority |
controller doesn't have over 50% but because the rest of the shareholders are either fragmented or don't participate they are able to control
|
|
|
Participation in shareholder agreements |
A group of shareholders works together to collectively own over 50% |
|
|
Ability to impose dominant influence because of contracts |
If a supplier only supplies to one buyer, the buyer can choose not to buy from them and put them out of business, so they have control. (defined as control under Italian law) |
|
|
The power to appoint directors of another company |
Especially in the UK and Germany, typically because they have majority or de facto majority, if a company is allowed to choose directors they are able to chose who runs the company, therefore they run the company.
|
|
|
Chain of control |
A company can own a company that owns another company, therefore the first company owns the third. |
|
|
Intra-Group Transactions |
-Frequent because they're less expensive -Dangerous because it can create prejudices against certain companies in the group -disliked by creditors and shareholders, not of the parent company, because it can make certain companies run at a loss -Majority shareholders aren't effected because they make money either way through the subsidiaries. |
|
|
Employee Protection in the UK |
No protection by laws but have strong trade unions
|
|
|
European Works Council |
Gives protection to employees not working at headquarters, provides them with information and consultation. Not required in countries that don't have them (UK and Italy) |
|
|
Collective redundancy of employment |
Requires each state to create a procedure to pay employees who aren't working |
|
|
Transfers of undertaking directive
|
Makes sure that if there is a change in ownership each employee is informed and keeps their job |
|
|
Directive on a general framework for informing and consulting employees |
-must set up information and consulting on any new changes in the line of business (industry they will work in) -info and consulting on situations of structure and developement -information and consultation on decisions that could lead to substantial changes in work organizations and contractural agreements |
|
|
Employee Protection in France |
Company law provides some protection, but mostly through labour law |
|
|
French Work Council |
Every company with over 50 employees, for atleast a year. Delegates of the works council have the right to be in BoD and BoS meetings as advisors (no decision making process) And are informed on all matter that will effect employees |
|
|
French Personnel Representatives |
Any firm with over 10 employees, the representatives are able to present claims about the treatment of the employees |
|
|
French Trade Unions |
If the firm has 50 employees they are able to argue about fairer wages |
|
|
Employee Protection Company Law France |
If the articles say so, an employee can be appointed to the BoD or BoS and if the employees collectively have over 3% of the company then they can appoint one as a member of the BoD |
|
|
France Group Companies |
No statutory laws but judges have decided on some guidelines. A parent company cannot make decisions for a subsidiary that will lead to insolvency but they can force that subsidiary to lose in order to gain for the group. Only with a stable long lasting group structure, and a good group structure that allows for positive cost-revenue |
|
|
Italian Employee Protection |
No codetermination, that is the role of representatives and trade unions |
|
|
Group Companies Italy |
Law Provides for review of fairness, if the parent company breaches the fair management of a company (mismanagement) then it is held liable for the damages faced by a subsidiary minus the benefits the subsidiary has gained from being in the group |
|
|
Labour Law Germany |
-Any firm with over 5 employees for 6 months is liable for a work council -Work councils have the right to information but not decision making -trade unions have their members influence the activities and decisions of a works council |
|
|
Company Law Employee Protection Germany |
Companies in the CIS (Coal Iron Steel) sectors have co determination with employees (they are part of decision making process). Some representatives are appointed to the BoS to participate in management and gain a lot of information. |
|
|
Group Companies Germany |
Only applies to public companies, 3 groups De Facto group Contractual Group Integration Group |
|
|
Contractual Group Germany |
Decided by minority shareholders with a super majority (3/4) and it gives the parent company the power to follow what will benefit the group most rather than the subsidiary. Parent company must indemnify the subsidiaries. If no indemnification minority shareholders can sue or leave company. Parent companies cannot make decisions that put the subsidiary at risk. Subsidiaries must draw up losses and report at the end of the year, after being reviewed by the BoS. If the BoS neglects to review them then the BoS are held liable
|
|
|
Defacto Groups Germany |
Only if subsidiary is public. Difference between contractual is that the law becomes creditors if the parent company doesn't provide indemnification. Transactions cannot happen unless the shareholders agree to them, if they do occur without the shareholders agreement then the parent company becomes liable towards the creditor and the subsidiary |
|
|
Integration group |
-Parent company holds 100% of subsidiary -Both must be public -If controlling company only holds 95% the minority shareholders can be forcibly bought out -Minorities are bought our at a fair price determined by a 3rd party expert -Parent company controls subsidiary as if it were a branch of the main company -Parent company always liable to subsidiaries creditors -Parent company can make any decisions but is required to keep subsidiary afloat |
