Related party transactions - Legal strategies for related party transactions - The affiliation strategy
3 important questions on Related party transactions - Legal strategies for related party transactions - The affiliation strategy
What is an example of targeted disclosure? TQ
p. 151-152
European jurisdictions allow minority shareholders to file a request for the designation of a business expert or special auditor to investigate specific transactions, often self-dealing ones.
What are some upsides and downsides of mandatory disclosure? TQ
p 147>
Upsides:
- supports internal decision-makers independence
- facilitates private and public enforcement against the extraction of private benefits
- it does not constrain legitimate self-dealing, compensation contracts or trading of shares
Downsides:
- It may lead to overenforcement
What is the main added value of dissolution and exit rights as strategies to constrain related-party transactions? TQ
P. 152
Because litigation involving valuation issues is costly this dissolution right is mainly a negotiation tool in a situation of minority "oppression", thus discouraging extreme forms of abuse ex-ante.
Because litigation involving valuation issues is costly this dissolution right is mainly a negotiation tool in a situation of minority "oppression", thus discouraging extreme forms of abuse ex-ante.
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