Category: Legal Issues and Strategies against Expropriation

Sanctions against Minority Shareholders Expropriations

The law can deter wrongdoing by using sanctions such as fines and prison terms against abusive self-dealing by the controlling shareholder and those who approved the transaction. Fines and criminal sanctions can be imposed upon the interested director and the approving body ranging from criminal intent to obtaining unlawful profits to breaching duties of care ...

Remedies Against Minority Shareholders Expropriations

Legal strategies against minority shareholders expropriations are of course pointless without appropriate remedies and enforcement mechanisms. In order to have appropriate remedies, minority shareholders should be easily able to prove the wrongdoing (Djankov et al., 2008; Conac et al., 2007). Accordingly, ex post disclosure is required first in annual reports and periodic filings which in ...

Self-Dealing; Approval and Disclosures Procedural Requirements

Legal systems often impose procedural requirements on self-dealing transactions to determine their structure and to encourage companies to follow a given procedure thereby making it harder for shareholder plaintiff’s to challenge procedurally fair transactions (Conac et al., 2007). Djankov et al. (2008) give examples of how the law can regulate a transaction involving self-dealing so ...

Legal System Strategies against Self-Dealing

It is appropriate to note that self-dealing transactions traditionally fall within the scope of insider’s fiduciary duty of loyalty (Enriques, 2000, p. 5), that is, the duty to subordinate their own interests to those of the corporation whenever a conflict arises (Henn and Alexander, 1983). Often, the rationale for the regulation of self-dealing transactions is ...

Explanations for Differences in Levels of Investor Protection

Although, La Porta and colleagues pointed out the importance of legal foundation for investor protection, other theories argue that legal determinants are complex. These theories suggest that the differences in the investor protection level around the world are determined by other variables, particularly important exogenous variables are those related to political economy considerations. Politics can ...

Legal origin and Shareholders protection

In the past decade, LLSV spearheaded a rapidly evolving mass of literature emphasising the part played by legal institutions in moulding the national pattern of financial management and economic growth. What the literature argued was a core concept for corporate governance was the protection of investor rights against the expropriation by insiders and legal enforcement ...

Law and Corporate Governance

The crucial role played by the law in corporate governance and then economic efficiency was understood by early legal scholars (Cheffins, 2001), however, historically, economists have been sceptical of the claim that in general social factors such as law, politics and culture are fundamental to companies and economic growth (Fligstein and Choo, 2005). Some even ...