scholarly journals Regulating Related Party Transactions During the COVID-19 Crisis

2021 ◽  
Vol 10 (1) ◽  
pp. 1-31
Author(s):  
Anna Toniolo
Keyword(s):  
Economic Environment ◽  
Economic Recovery ◽  
Minority Shareholders ◽  
Trade Off ◽  
Economic Changes ◽  
Related Party Transactions ◽  
Optimal Balance ◽  
A Company

Related party transactions ("RPTs") are frequently used as a tool for siphoning off value from a company, but they can also be an efficient instrument for assisting firms. The trade-off between stopping value-decreasing RPTs and promoting value-increasing RPTs requires lawmakers to seek an optimal balance, relying on several contingent factors. This paper highlights the strong interdependency between RPTs regulation and economic changes. After the 2008 crisis, policymakers have enhanced minority shareholders' control over RPTs, considering their involvement as the most effective safeguard against tunnelling. During the COVID-19 crisis, governments have introduced exemptions to the rules on RPTs, even if they might weaken minority shareholders' protection. The reason is that firms face dramatic liquidity shortfalls due to the pandemic, and RPTs can be a vehicle for providing finance to distressed companies, avoiding a wave of bankruptcies that would be dangerous for the economy. Thus, RPTs regulation has been tweaked for adapting to the new economic environment, and these legal changes, in turn, could affect the economic recovery.

scholarly journals Self-Dealing by Controlling Shareholders: Improving Minority Protection in Light of Article 9 c SRD

2018 ◽  
Vol 15 (2) ◽  
pp. 197-235
Author(s):  
Nick Hallemeesch
Keyword(s):  
Judicial Review ◽  
Company Law ◽  
Independent Directors ◽  
Shareholder Rights ◽  
Minority Shareholders ◽  
Minority Protection ◽  
Controlling Shareholders ◽  
Related Party Transactions ◽  
Article 9 ◽  
A Company

Controlling shareholders may cause a company to enter into transactions with themselves or one of their subsidiaries, thereby expropriating minority shareholders. General principles of company law, such as board autonomy, often do not adequately constrain controlling shareholders. Moreover, Belgian, French and Dutch courts apply deferential standards of review to related party transactions, while approval procedures in these jurisdictions are also flawed. A recent amendment to the Shareholder Rights Directive requires adequate protection of minority shareholders against self-dealing. Member States may subject related party transactions to a majority-of-minority vote, the approval of independent directors or judicial review. This paper discusses the efficiency of each of these mechanisms.

scholarly journals THEORETICAL AND METHODICAL BASES OF MANAGING ORGANIZATIONAL AND ECONOMIC CHANGES IN A COMPANY

2018 ◽  
Vol 1 (11(39)) ◽  
pp. 56-61
Author(s):  
Nataliia Kondratenko ◽  
Maryna Hnatenko ◽  
Oleh Kolontaievskyi
Keyword(s):  
Economic Changes ◽  
A Company

scholarly journals Revenues from related parties: A risk factor in Italian listed company financial statements

2015 ◽  
Vol 13 (1) ◽  
pp. 254-265
Author(s):  
Fabrizio Bava ◽  
Melchiorre Gromis di Trana
Keyword(s):  
Risk Factor ◽  
Listed Company ◽  
Financial Statements ◽  
Related Party Transactions ◽  
Corporate Scandals ◽  
A Company

In recent decades, related party transactions (RPTs) have played a prime role in major corporate scandals, obliging regulators to strengthen the rules with new bans and expensive requirements on companies. This study aims to contribute to the literature on RPTs, providing evidence to justify increasingly expensive and mandatory regulation. Results show that the intensity of related party revenues increases where a company has lost profitability as well as turnover.

scholarly journals The Effect of Related Party Transactions on the Performance of Indonesian Listed Companies

2021 ◽  
Vol 20 (1) ◽  
pp. 21-39
Author(s):  
Brigitta Angelica ◽  
◽  
Desya Gunawan ◽  
Jessy Christella ◽  
Yane Chandera ◽  
...  
Keyword(s):  
Firm Performance ◽  
Stock Exchange ◽  
Empirical Studies ◽  
Negative Relationship ◽  
Company Performance ◽  
Minority Shareholders ◽  
Related Party Transactions ◽  
Direct Light ◽  
Panel Data Regression ◽  
The Impact

Abstract. The purpose of this paper is to analyze the impact of related party transactions (RPTs) on company performance using a panel data regression on 388 non-financial companies listed in Indonesia Stock Exchange during the 2015-2018 period. RPT variables used in this study are divided into several categories, namely transactions with related parties in the operational field (operational RPTs), financial field (financial RPTs), other fields (other RPTs), and total RPTs (sum of the three previous types). The study finds a significant negative relationship between financial RPTs and other RPTs on company performance. This finding is consistent with the precedent research that non-operational RPTs (i.e., financial RPTs and other RPTs) are commonly used by controlling shareholders as tunneling channels to expropriate minority shareholders. The results suggest policymakers to monitor more closely RPTs, particularly financial and other RPTs, that are more likely to be used as tunneling activities that are detrimental to firm performance. The results of this study are robust to various proxies of firm performance, providing additional empirical studies on RPTs in emerging countries with concentrated ownership structure, and shedding direct light on which type of RPTs that is mainly used as tunneling channel. Keywords: Efficient transaction hypothesis, firm performance, Indonesia, related party transactions, type II agency problem

scholarly journals Principal-principal conflicts leading to activism of a large government-owned investor in Brazil

2021 ◽  
Vol 5 (1) ◽  
pp. 15-21
Author(s):  
Bruno Elmôr Duarte ◽  
Ricardo Pereira Câmara Leal
Keyword(s):  
Corporate Governance ◽  
Government Policy ◽  
Poor Performance ◽  
Ownership Concentration ◽  
Minority Shareholders ◽  
Trade Off ◽  
Legal Proceedings ◽  
Brazilian Government ◽  
And Performance

This article analyzes conflicts between principals that led to activism by one large Brazilian government-owned investor as a minority shareholder and verifies the antecedents, means employed, apparent motivations, and effectiveness of its reactions (Goranova & Ryan, 2014). It examines the cases of three large high ownership concentration listed companies using solely public sources. Poor performance was a frequent conflict antecedent. No evident trade-off between activism and corporate governance (CG) practices emerged. High ownership concentration influenced the way the investor reacted and its success because opposition through internal CG mechanisms was usually not successful and led to legal proceedings. The limitations of the regulatory framework became evident from the mixed outcomes of these proceedings. The investor was not exclusively financially motivated and it occasionally opposed the interests of other minority shareholders to follow government policy. These findings illustrated how high ownership concentration rendered difficult the mitigation of principal-principal conflicts even for a large government-owned investor and help explain the failure of previous econometric studies to relate activism, quality of CG practices and performance (Young, Peng, Ahlstrom, Bruton, & Jiang, 2008)

Majority and Minority Shareholders

2020 ◽  
pp. 119-174
Author(s):  
Paul Davies
Keyword(s):  
At Risk ◽  
High Risk ◽  
Small Group ◽  
Company Law ◽  
Minority Shareholders ◽  
Private Benefits ◽  
Controlling Shareholders ◽  
The Third ◽  
Wide Range ◽  
A Company

Where a company has a controlling or a small group of controlling shareholders, the non-controlling shareholders are at risk that the controllers will extract private benefits of control at the expense of the non-controllers. UK company law contains a wide range of techniques for addressing this issue, some more effective than others. This chapter begins by examining the various ways in which well-advised investors can contract for protection before they enter the company and how the law protects the agreements reached. The second part discusses rights to exit the company upon the occurrence of certain events. The third part discusses disclosure rights, designed to bring self-dealing transactions into the open. The fourth focuses on ways of structuring the board or shareholder body when the decision before it carries a high risk of self-dealing. The final part considers cases where the courts review the substantive fairness of the controllers’ conduct, notably, but not only, the provisions on ‘unfair prejudice.

5. Majority and Minority Shareholders

2020 ◽  
pp. 119-174
Author(s):  
Paul Davies
Keyword(s):  
At Risk ◽  
High Risk ◽  
Small Group ◽  
Company Law ◽  
Minority Shareholders ◽  
Private Benefits ◽  
Controlling Shareholders ◽  
The Third ◽  
Wide Range ◽  
A Company

Where a company has a controlling or a small group of controlling shareholders, the non-controlling shareholders are at risk that the controllers will extract private benefits of control at the expense of the non-controllers. UK company law contains a wide range of techniques for addressing this issue, some more effective than others. This chapter begins by examining the various ways in which well-advised investors can contract for protection before they enter the company and how the law protects the agreements reached. The second part discusses rights to exit the company upon the occurrence of certain events. The third part discusses disclosure rights, designed to bring self-dealing transactions into the open. The fourth focuses on ways of structuring the board or shareholder body when the decision before it carries a high risk of self-dealing. The final part considers cases where the courts review the substantive fairness of the controllers’ conduct, notably, but not only, the provisions on ‘unfair prejudice.

scholarly journals Robustness, Sensitivity, and Sampling Variability of Pareto-Optimal Selection System Solutions to Address the Quality-Diversity Trade-Off

2019 ◽  
Vol 23 (3) ◽  
pp. 535-568
Author(s):  
Wilfried De Corte ◽  
Paul R. Sackett ◽  
Filip Lievens
Keyword(s):  
Simulation Study ◽  
Critical Issue ◽  
Pareto Optimal ◽  
Optimal Selection ◽  
Selection System ◽  
Trade Off ◽  
Sampling Variability ◽  
Optimal Balance ◽  
Selection Systems ◽  
System Designs

In case that both the goals of selection quality and diversity are important, a selection system is Pareto-optimal (PO) when its implementation is expected to result in an optimal balance between the levels achieved with respect to both these goals. The study addresses the critical issue whether PO systems, as computed from calibration conditions, continue to perform well when applied to a large variety of different validation selection situations. To address the key issue, we introduce two new measures for gauging the achievement of these designs and conduct a large simulation study in which we manipulate 10 factors (related to the selection situation, sensitivity/robustness, and the selection system) that cumulate in a design with 3,888 cells and 24 selection systems. Results demonstrate that PO systems are superior to other, non-PO systems (including unit weighed system designs) both in terms of the achievement measures as well as in terms of yielding more often a better quality/diversity trade-off. The study also identifies a number of conditions that favor the achievement of PO systems in realistic selection situations.

scholarly journals Konsentrasi Kepemilikan, Transaksi Pihak Berelasi, dan Kinerja Perusahaan

2019 ◽  
Vol 29 (2) ◽  
pp. 592
Author(s):  
Nitami Galih Pangesti ◽  
Widi Hidayat
Keyword(s):  
Firm Performance ◽  
Stock Exchange ◽  
Ownership Concentration ◽  
Manufacturing Companies ◽  
Minority Shareholders ◽  
Governance System ◽  
Related Party Transactions ◽  
Analysis Technique ◽  
Quantitative Descriptive ◽  
Positive Effect

Agency theory describe that ownership concentration is a good corporate governance system that helps to reduce agency problems arising from the divergence of interest between shareholders and managers. But, when ownership concentration becomes high, lead to another agency problem that is conflict between controlling shareholders and minority shareholders. This study purposed to examine the relation of ownership concentration and related party transactions on firm performance. This research uses quantitative descriptive method with associative approach. Sample used in this study was 474 manufacturing companies listed on the Indonesia Stock Exchange in 2014-2018. We used multiple linear regression as analysis technique. Results showed that ownership concentration had a positive effect on firm performance and related party transactions had a positive effect on firm performance. Keywords : Ownership Concentration; Related Party Transactions; Firm Performance.

scholarly journals Perlindungan Hukum Terhadap Pemegang Saham Minoritas Pada Perseroan Terbatas Yang Melakukan Merger

2020 ◽  
Vol 2 (1) ◽  
pp. 59-62
Author(s):  
I Kadek Sridana ◽  
I Nyoman Putu Budiartha ◽  
I Putu Gede Seputra
Keyword(s):  
Research Method ◽  
Government Regulation ◽  
Legal Protection ◽  
Limited Liability ◽  
Limited Liability Company ◽  
Minority Shareholders ◽  
Legal Position ◽  
The Law ◽  
A Company

Abstract-Mergers can be said as a strategy or one way to increase a company, therefore there is a need for legal protection for minority shareholders if they do not agree with the merger but the merger is still implemented, and the shareholders are forced to accept the merger. The formulation of the problem in this case is (1) what is the position of the minority shareholders for the limited liability company that merges? (2) What is the legal protection of minority shareholders in a limited liability company that merges? This research method uses a normative research method by approaching the problem in the form of a draft law that relates to the problem under study. The sources of legal material to be used are sourced from research, the literature in the form of primary legal material and secondary legal material. The result of this study are the legal position of the minority shareholders of the company (PT) that carried out the merger has been regulated in Law number 40 of 2007 concerning Limited Liability Companies and in Government Regulation Number 27 of 1998 concerning merger, consolidation and takeover of the interests of minority shareholders. In general, the law of limited liability companies is a guideline in the framework of protecting minority shareholders. Protection of minority shares is one of the important things, especially when the company conducts legal actions such as mergers, both preventive legal protection and repressive legal protection. Keywords: Legal protection, shareholders, mergers Abstrak- Merger dapat dikatakan sebagai strategi atau salah satu cara untuk meningkatkan suatu perusahaan oleh karena itu perlu adanya perlindungan hukum terhadap pemegang saham minoritas apabila mereka tidak setuju dengan merger namun merger tetap dilaksanakan, dan pemegang saham tersebut dipaksakan untuk menerima merger tersebut. Adapun rumusan masalah dalam hal ini (1) Bagaimanakah kedudukan pemegang saham minoritas bagi perseroan terbatas yang melakukan merger? (2) Bagaimanakah perlindungan hukum terhadap pemegang saham minoritas pada perseroan terbatas yang melakukan merger? Metode penelitian ini menggunakan metode penelitian normatif dengan melakukan pendekatan masalah berupa pedekatan perundang-undangan yang berkaitan dengan masalah yang dikaji. Adapun sumber bahan hukum yang akan digunakan yakni bersumber dari penelitian, kepustakaan berupa bahan hukum primer dan bahan hukum sekunder. Adapun hasil dari penelitian ini adalah kedudukan hukum pemegang saham minoritas terhadap perusahaan (PT) yang melakukan merger, sudah diatur dalam Undang-undang nomor 40 tahun 2007 tentang Perseroan terbatas serta dalam Peraturan pemerintah Nomor 27 Tahun 1998 tentang penggabungan, peleburan, dan pengambilalihan tentang kepentingan pemegang saham minoritas. Secara umum hukum perseroan terbatas menjadi pedoman dalam rangka perlindungan pemegang saham minoritas. Perlindungan terhadap saham minoritas merupakan salah satu hal yang penting terutama saat persroan melakukan perbuatan hukum seperti merger baik perlindungan hukum secara preventif maupun perlindungan hukum secara represif. Kata kunci: Perlindungan hukum, Pemegang saham, Merger

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