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    Corporate finance law : principles and policy / Louise Gullifer and Jennifer Payne.

    • Title:Corporate finance law : principles and policy / Louise Gullifer and Jennifer Payne.
    •    
    • Author/Creator:Gullifer, Louise.
    • Other Contributors/Collections:Payne, Jennifer, 1970-
    • Published/Created:Oxford ; Portland, Or. : Hart Pub., 2011.
    • Holdings

       
    • Library of Congress Subjects:Corporations--Finance--Law and legislation--England.
      Corporations--Finance--Law and legislation--Wales.
    • Description:lxvi, 719 p ; 24 cm.
    • Notes:Includes bibliographical references and index.
    • ISBN:9781849460040 (pbk.)
      1849460043 (pbk.)
    • Contents:Machine generated contents note: 1. Introduction
      2. Overview of Financing Options
      2.1. Introduction
      2.2. Equity Financing
      2.2.1. Different Types of Shares
      2.2.1.1. Ordinary Shares
      2.2.1.2. Preference Shares
      2.2.2. Sources of Equity Finance
      2.3. Debt Financing
      2.3.1. General
      2.3.1.1. Choice of Debt Financing Transaction
      2.3.1.2. Protection of Creditors: Contractual and Proprietary
      2.3.1.3. Protection of Creditors: Regulation
      2.3.1.4. Multiple Lenders and Transfer of Debt
      2.3.2. Loans
      2.3.3. Debt Securities
      2.3.3.1. General
      2.3.3.2. Securities Versus Loan
      2.3.3.3. Who Issues Bonds?
      2.3.3.4. Debt Securities Versus Equity
      2.3.3.5. Varieties of Bonds
      2.3.4. Finance Based on Assets
      2.3.4.1. Receivables Financing
      2.3.4.2. Asset-based Lending
      2.3.4.3. Devices Based on Retention of Title
      2.3.4.3.1. Sale and Leaseback
      2.3.4.3.2. Asset Finance
      2.3.4.3.3. Stock Finance
      2.3.4.3.4. Sales on Retention of Title Terms
      2.3.5. Specialised Forms of Finance
      2.3.5.1. Project Finance
      2.3.5.2. Financing of Group Companies
      2.3.5.3. Trade Finance
      2.4. Hybrids
      2.5. Retained Profits
      2.6. Debt/Equity Mix
      2.7. Conclusion
      3. Relationship between Equity and Debt
      3.1. Introduction
      3.2. Relationship between Equity and Debt in a Solvent Company
      3.2.1. Position of Shareholders in a Solvent Company
      3.2.1.1. Ordinary Shares
      3.2.1.2. Preference Shares
      3.2.1.3. Role of Shareholders in a Solvent Company
      3.2.1.3.1. Section 172 of the Companies Act 2006
      3.2.1.3.2. Explaining the Pre-eminence of Shareholders
      3.2.1.3.3. Corporate Governance Role of Shareholders
      3.2.2. Position of the Creditors in a Solvent Company
      3.2.2.1. Non-adjusting Creditors
      3.2.2.2. Risks to Creditors from the Operation of a Solvent Company
      3.2.2.3. Restrictions on the Company's Activities
      3.2.2.4. Corporate Governance Role of Debt
      3.3. Relationship between Debt and Equity in an Insolvent Company
      3.3.1. Order of Payment Out on a Winding Up or Distribution by an Administrator
      3.3.1.1. Holders of Proprietary Claims
      3.3.1.2. Order of Priority in Relation to Floating Charge Assets
      3.3.1.2.1. Liquidator's or Administrator's Expenses
      3.3.1.2.2. Preferential Creditors
      3.3.1.2.3. Prescribed Part
      3.3.1.2.4. General Unsecured Creditors
      3.3.1.2.5. Shareholders
      3.3.2. Preservation of the Assets for Creditors on and during the Run-up to Insolvency
      3.3.2.1. Preventing Reduction of the Asset Pool
      3.3.2.2. Preventing Uneven Distribution of the Assets
      3.3.2.3. Protection of Creditors
      3.3.3. Balance between Creditors and Shareholders in an Insolvent Company
      3.3.3.1. Lifting the Veil between the Creditors and the Shareholders
      3.4. Conclusion
      4. Legal Capital
      4.1. Introduction
      4.2. Function of the Legal Capital Rules
      4.3. Legal Capital Rules in the UK
      4.3.1. Raising of Capital
      4.3.2. Minimum Capital Rules
      4.3.2.1. Entry Price for Limited Liability
      4.3.2.2. Measurement of Consideration
      4.3.2.3. Efficacy of these Rules as a Form of Shareholder Protection
      4.3.2.4. Efficacy of these Rules as a Form of Creditor Protection
      4.4. Maintenance of Capital
      4.4.1. Dividend Payments
      4.4.2. Repurchases and Redemptions of Shares
      4.4.3. Reductions of Capital
      4.4.4. Prohibition Against Financial Assistance
      4.4.5. Efficacy of these Rules as a Form of Creditor Protection
      4.5. Alternatives to the Legal Capital Rules
      4.5.1. Creditor Protection via Contract
      4.5.2. Creditor Protection via Insolvency Law
      4.5.3. Solvency Statement Approach
      4.6. Conclusion
      5. Creditor Protection: Contractual
      5.1. Introduction
      5.2. Contractual Rights Against the Borrower
      5.2.1. Restrictions on the Borrower's Activities
      5.2.1.1. Negative Pledge Clause
      5.2.1.2. Forms of Negative Pledge Clause
      5.2.1.3. Enforcement of Restrictive Covenants
      5.2.2. Rights to Information and Financial Covenants
      5.2.2.1. Rights at the Time of Making the Loan
      5.2.2.2. Ongoing Rights
      5.2.3. Termination and Acceleration Rights
      5.2.3.1. Events of Default
      5.2.3.2. Effect of Wrongful Acceleration
      5.2.3.3. Validity of Acceleration Clauses
      5.2.4. Set-off
      5.2.4.1. Use of Set-off and Flawed Asset Structures in Lending
      5.2.4.2. Independent Set-off
      5.2.4.3. Transaction Set-off
      5.2.4.4. Banker's Right to Combine Accounts
      5.2.4.5. Contractual Set-off and Exclusion of Set-off
      5.2.4.6. Insolvency Set-off
      5.2.4.6.1. Limits and Operation of Insolvency Set-off
      5.2.4.6.2. Mandatory and Exclusive Nature of Insolvency Set-off
      5.2.4.6.3. Policy Justifications for Insolvency Set-off
      5.3. Contractual Rights Against Third Parties
      5.3.1. Guarantees, Indemnities and Performance Bonds
      5.3.1.1. Introduction
      5.3.1.2. Important Distinctions
      5.3.1.3. Guarantees
      5.3.1.3.1. Protection of the Third Party: Construction of the Guarantee
      5.3.1.3.2. Protection of the Third Party: Discharge of the Third Party
      5.3.1.3.3. Protection of the Third Party: Third Party's Rights against the Principal Debtor
      5.3.1.4. Indemnity and Performance Bond
      5.3.1.4.1. Nature of Third Party's Liability
      5.3.2. Credit Insurance
      5.3.3. Credit Default Swaps
      5.3.4. Subordination
      5.3.4.1. Types of Subordination
      5.3.4.1.1. Turnover Trust
      5.3.4.1.2. Contingent Debt
      5.3.4.1.3. Contractual Subordination
      5.3.4.1.4. Structural Subordination
      5.4. Conclusion
      6. Creditor Protection: Proprietary
      6.1. Introduction
      6.1.1. Purpose of Obtaining Proprietary Rights
      6.1.2. Absolute Interests
      6.1.3. Distinctions in Relation to a Company's Assets
      6.2. Absolute and Security Interests
      6.2.1. What is a Security Interest?
      6.2.2. Characterisation of Interests as Absolute or Security Interests
      6.2.3. Reasons for Choosing a Structure based on an Absolute or a Security Interest
      6.2.4. Policy Considerations
      6.2.5. Detailed Process of Characterisation
      6.2.5.1. Grant and Grant-back
      6.2.5.2. Grant
      6.2.5.3. Retention of Title
      6.2.5.4. Quistclose Trusts
      6.3. Types of Security Interests
      6.3.1. Introduction
      6.3.2. Non-possessory Security Interests
      6.3.2.1. Security over Future Property
      6.3.2.2. Mortgage
      6.3.2.3. Charge
      6.3.2.4. Security Interest over Lender's own Indebtedness
      6.3.3. Floating Charge
      6.3.3.1. Introduction
      6.3.3.2. Crystallisation
      6.3.3.3. Distinction between Fixed and Floating Charges
      6.3.3.3.1. Introduction
      6.3.3.3.2. Defining Features of a Fixed Charge and a Floating Charge
      6.3.3.3.3. Methodology of Characterising a Charge as Fixed or Floating
      6.3.3.3.4. Should Floating Charges be Treated Differently?
      6.3.3.4. Future of the Floating Charge
      6.4. Registration and Priorities
      6.4.1. Requirement of Registration
      6.4.1.1. Charges over Securities
      6.4.1.2. Other Fixed Charges which are Not Registrable
      6.4.1.3. Other Registers
      6.4.2. Registration Process
      6.4.3. Effect of Registration
      6.4.3.1. Consequences of Failure to Register
      6.4.3.2. Registration as Notice
      6.4.4. Priorities
      6.5. Enforcement
      6.5.1. Methods of Enforcement: Security Interests
      6.5.1.1. Foreclosure
      6.5.1.2. Appropriation of Financial Collateral
      6.5.1.3. Possession and Sale
      6.5.1.4. Appointment of a Receiver
      6.5.2. Methods of Enforcement: Absolute Interests
      6.5.2.1. Devices Based on Retention of Title
      6.5.2.2. Devices based on the Grant of an Absolute Interest
      6.5.3. Effect of Administration
      6.6. Economic Arguments about Secured Credit
      6.6.1. Means of Assessing a System of Secured Credit
      6.6.2. Puzzle of Secured Credit
      6.6.2.1. Monitoring
      6.6.2.2. Signalling
      6.6.2.3. Non-adjusting Creditors
      6.7. Reform
      6.7.1. Attributes of an Ideal Law
      6.7.2. Unsatisfactory Aspects of English Law
      6.7.3. Options for Reform
      6.7.4. Outline of Notice Filing Scheme
      6.7.4.1. Functional Approach
      6.7.4.2. Registration
      6.7.4.3. Priorities
      6.7.4.4. Enforcement
      6.7.5. Assessment of Reform
      7. Multiple Lenders
      7.1. Introduction
      7.2. Basic Concepts
      7.2.1. Trust
      7.2.2. Agency
      7.3. Issue of Debt Securities
      7.3.1. Attracting Lenders
      7.3.2. Structure of Securities Issue
      7.3.2.1. Difference Between Bonds and Stock
      7.3.2.2. Stock
      7.3.2.2.1. Debt Owed to a Trustee
      7.3.2.2.2. Debt Contained in a Deed Poll
      7.3.2.3. Eurobonds
      7.3.2.3.1. Advantages and Disadvantages of the Trustee Structure
      7.3.2.3.2. Subject Matter of the Trust
      7.3.2.3.3. Bond Issue Without Trustee
      7.3.3. Ascertaining the Views of Holders
      7.3.4. Trustees' Obligations
      7.3.5. Excluding Trustees' Duties
      7.4. Syndicated loans
      7.4.1. Comparison between Agency in Syndicated Loans and Trustee in Bond Issues
      7.4.2. Finding Lenders
      7.4.3. Role of the Arranger
      7.4.4. Liability of the Agent Bank in Relation to False Statements in the Information Memorandum
      7.4.5. Position of the Agent Bank
      7.4.6. Majority Lenders
      7.5. Conclusion
      8. Transferred Debt
      8.1. Why is Debt Transferred?
      8.2. Methods of Transfer
      8.2.1. Novation
      8.2.2. Assignment
      8.2.2.1. Statutory and Equitable Assignments
      Contents note continued: 8.2.2.2. Clauses Prohibiting Assignment
      8.2.2.3. Reform
      8.2.3. Negotiable Instruments
      8.2.4. Transfer of Stock
      8.2.5. Transfer of Intermediated Securities
      8.2.6. Transfers via CREST
      8.2.7. Transfers of Shares
      8.3. Structures which have a Similar Effect to Transfer
      8.3.1. Sub-participation
      8.3.2. Credit Derivatives
      8.3.3. Securitisation
      8.4. Conclusion
      9. Public Offers of Shares
      9.1. Introduction
      9.2. Why would a Company Consider an IPO?
      9.2.1. Advantages of an Offer of Shares to the Public
      9.2.2. Disadvantages of a Public Offer
      9.2.3. Summary
      9.3. Theory of Regulation of Public Offers
      9.3.1. Objectives of Regulation
      9.3.2. Need for Regulation
      9.3.3. Regulatory Strategies
      9.3.3.1. Trusteeship
      9.3.3.2. Affiliation Strategies
      9.3.3.3. Mandatory Disclosure
      9.4. Regulation of Public Offers in the UK: Ex Ante Protection via Mandatory Disclosure
      9.4.1. Regulatory Structure
      9.4.2. Mandatory Disclosure in the UK
      9.5. Regulation of Public Offers in the UK: Enforcement of the Mandatory Disclosure Regime
      9.5.1. Aims of Enforcement
      9.5.1.1. Encouraging the Accurate and Timely Disclosure of Information
      9.5.1.2. Providing Compensation to Those Who Suffer Loss
      9.5.2. Private Enforcement: Civil Liability for Defective Prospectuses
      9.5.2.1. Nature of the Claim under Section 90 FSMA
      9.5.2.2. Who Can Claim?
      9.5.2.3. Who Can Be Sued?
      9.5.2.4. Remedy
      9.5.2.5. Summary
      9.5.3. Public Enforcement
      9.5.3.1. Criminal Sanctions
      9.5.3.2. Administrative Sanctions
      9.5.3.3. Summary
      9.5.4. Intensity of Enforcement
      9.6. Conclusion
      10. Ongoing Regulation of the Capital Markets
      10.1. Introduction
      10.2. Objectives of Ongoing Capital Market Regulation
      10.2.1. Promoting an Efficient Market Price
      10.2.1.1. Efficient Capital Markets Theory
      10.2.1.2. Regulation of the Ongoing Market: The Role of Mandatory Disclosure
      10.2.1.3. Regulation of the Ongoing Market: The Role of Market Abuse
      10.2.2. Promoting Corporate Governance
      10.2.2.1. Private Investors
      10.2.2.2. Institutional investors
      10.2.2.3. Summary
      10.3. Use of Mandatory Disclosure
      10.3.1. Periodic Disclosures
      10.3.1.1. Annual Reports
      10.3.1.2. Half Yearly and Quarterly Reporting
      10.3.1.3. Function of Periodic Disclosures
      10.3.2. Ad hoc Disclosures
      10.3.2.1. Inside Information
      10.3.2.2. Disclosure of Directors' Shareholdings
      10.3.2.3. Disclosure of Major Shareholdings
      10.3.2.4. Disclosures Required by the Listing Rules
      10.3.2.5. Function of Ad Hoc Disclosures
      10.4. Enforcement of the Mandatory Disclosure Obligations
      10.4.1. Private Enforcement
      10.4.1.1. Enforcement by Shareholders of Misstatements in Governance-based Disclosures
      10.4.1.2. Enforcement by Shareholders and Other Investors of Investor-focused Disclosures
      10.4.1.2.1. Background
      10.4.1.2.2. Scope of the Section 90A FSMA Provisions
      10.4.1.2.3. Comparison of Section 90A FSMA (Liability in Relation to Ongoing Disclosures) and section 90 FSMA (Liability for Misstatements in Prospectuses)
      10.4.1.2.4. Assessment of section 90A
      10.4.1.3. Summary of Private Enforcement Mechanisms
      10.4.2. Public Enforcement
      10.4.2.1. FSA
      10.4.2.2. Financial Reporting Review Panel
      10.5. Regulation of Market Abuse
      10.5.1. Private Enforcement of Market Abuse
      10.5.2. Public Enforcement of Market Abuse
      10.5.2.1. Criminal Offence of Insider Dealing under the Criminal Justice Act 1993
      10.5.2.1.1. Definition of an Insider
      10.5.2.1.2. Definition of Inside Information
      10.5.2.1.3. Offence of Actual Dealing in Securities
      10.5.2.1.4. Offence of Encouraging another Person to Deal
      10.5.2.1.5. Offence of Disclosing Inside Information to Another Person
      10.5.2.1.6. Penalties and Enforcement
      10.5.2.2. Criminal Offence of Market Manipulation under Section 397 FSMA
      10.5.2.2.1. Misleading Statements and Dishonest Concealment
      10.5.2.2.2. Misleading Practices and Conduct
      10.5.2.2.3. Penalties and Enforcement
      10.5.2.3. Regulatory Offence of Market Abuse under Section 118 FSMA
      10.5.2.3.1. Insider Dealing
      10.5.2.3.2. Market Manipulation
      10.5.2.3.3. Levels of Enforcement of Market Abuse under Section 118
      10.6. Conclusion
      11. Regulation of Debt
      11.1. Introduction
      11.2. Regulation of Initial Issue of Debt Securities
      11.2.1. Introduction
      11.2.1.1. To whom the securities are offered
      11.2.1.2. Trading on a Market
      11.2.1.3. Denomination of Securities
      11.2.2. Regulatory Regime in Outline
      11.2.3. Information Required in a PD Prospectus
      11.2.4. Disclosure Required for Listing on the PSM
      11.2.5. Disclosure Requirements Where Securities are Not Listed
      11.2.6. Restrictions on Financial Promotion
      11.2.7. Enforcement of the Mandatory Disclosure Regime
      11.2.7.1. Claims Against the Issuer
      11.2.7.2. Claims Against Other Parties
      11.2.8. Comparison of Protection by Regulation for Holders of Debt Securities and Those Making Loans: Disclosure at the Initial Stage
      11.3. Ongoing Regulation by Disclosure
      11.3.1. Mandatory Ongoing Disclosure
      11.3.2. Enforcement of Ongoing Disclosure Requirements
      11.3.3. Comparison of Protection by Regulation for Holders of Debt Securities and Those Making Loans: Ongoing Disclosure
      11.4. Regulation of Market Abuse
      11.4.1. Application of the Market Abuse Rules to the Debt Securities Markets
      11.4.2. Application of the Market Abuse Rules to the Making and Transfer of Loans
      11.5. Accepting Deposits
      11.6. Convertible Debt Securities
      11.7. Regulation of Credit Rating Agencies
      11.8. Conclusion
      12. Takeovers
      12.1. Introduction
      12.1.1. Objectives of Takeover Regulation
      12.1.2. Comparative Aspects
      12.2. Regulatory Structure of Takeover Regulation in the UK
      12.2.1. Historical Development
      12.2.2. Implementation of the Takeover Directive
      12.2.3. Role and Status of the Takeover Panel
      12.2.4. Tactical Litigation
      12.2.5. Summary
      12.3. Substance of Takeover Regulation in the UK
      12.3.1. Procedure of a Bid
      12.3.1.1. Initial Approach
      12.3.1.2. Formal Offer
      12.3.1.3. Squeeze-out
      12.3.1.4. Sell-out
      12.3.1.5. Further Offers
      12.3.2. Relationship Between the Target Directors and the Target Shareholders
      12.3.2.1. Pre-bid Defences
      12.3.2.1.1. Directors' Duties
      12.3.2.1.2. Share Transfer Restrictions
      12.3.2.1.3. Removal of Directors and Staggered Boards
      12.3.2.1.4. Role of Shareholders, Particularly Institutional Investors
      12.3.2.1.5. Summary
      12.3.2.2. Post-bid Defences
      12.3.2.2.1. No Frustration Principle
      12.3.2.2.2. Consequences of the UK's Adoption of the No Frustration Principle
      12.3.3. Relationship Between the Target Directors and Other Stakeholders in the Target
      12.3.4. Relationship between the Bidder and the Target Shareholders
      12.3.4.1. Undistorted Choice
      12.3.4.2. Protection of Minority Shareholders
      12.3.4.2.1. Prevention of Oppression
      12.3.4.2.2. Exit Right
      12.3.5. Relationship Between the Bidder Directors and Bidder Shareholders
      12.4. Conclusion
      13. Schemes of Arrangement
      13.1. Introduction
      13.2. Uses of Schemes of Arrangement
      13.2.1. As an Alternative to a Takeover
      13.2.2. To Effect a Merger
      13.2.3. To Effect an Arrangement Between the Company and its Shareholders
      13.2.4. To Effect an Arrangement between the Company and its Creditors
      13.2.4.1. Arrangements with Creditors Involving Solvent Companies
      13.2.4.2. Arrangements with Creditors Involving Financially Distressed Companies
      13.2.5. Summary
      13.3. Mechanics of a Scheme of Arrangement
      13.3.1. Application to the Court for Meetings to be Summoned
      13.3.2. Meeting(s) of the Members or Creditors
      13.3.2.1. Who Needs to Consider the Scheme?
      13.3.2.2. Separate Class Meetings: General
      13.3.2.3. Separate Meetings for Shareholders
      13.3.2.4. Separate Meetings for Creditors
      13.3.2.5. Approval at the Class Meetings
      13.3.2.6. Summary
      13.3.3. Sanction of the Court
      13.3.3.1. Have the Statutory Provisions Been Complied With?
      13.3.3.2. Did the Majority Fairly Represent the Class?
      13.3.3.3. Would a Reasonable Person Approve the Scheme?
      13.3.3.4. Effect of the Scheme
      13.4. Conclusion
      14. Private Equity
      14.1. Introduction
      14.2. Historical Development
      14.3. Private Equity Funds
      14.3.1. Structure of a Typical Private Equity Fund
      14.3.2. Sources of Funding for Private Equity Funds
      14.3.3. Why have Investors Wanted to Invest in Private Equity Funds?
      14.4. Capital Structure of a Typical Private Equity Transaction
      14.4.1. Equity Financing
      14.4.2. Quasi Equity
      14.4.3. Debt Financing
      14.4.3.1. Senior Debt
      14.4.3.2. Second Lien Debt
      14.4.3.3. Mezzanine Debt
      14.5. Public to Private Transactions
      14.5.1. Financial issues
      14.5.2. Recommendation by the Directors
      14.5.3. Equality between Bidders
      14.5.4. Equality of Treatment of Shareholders
      14.5.5. Market Abuse
      14.6. Comparison of Private Equity and Public Company Structures
      14.6.1. Ownership Structures
      14.6.2. Debt vs Equity Levels
      14.6.2.1. Employees
      14.6.2.2. Creditors
      14.6.3. Board/Management Structures
      14.6.4. Period of Investment
      Contents note continued: 14.6.5. Transparency and Disclosure Issues
      14.6.6. Summary
      14.7. Conclusion.
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