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Index
Preface
List of Authors
1 What is Corporate Law?
John Armour, Henry Hansmann, and Reinier Kraakman
1.1 Introduction
1.2 What is a Corporation?
1.2.1 Legal personality
1.2.2 Limited liability
1.2.3 Transferable shares
1.2.4 Delegated management with a board structure
1.2.5 Investor ownership
1.3 Sources of Corporate Law
1.3.1 Special and partial corporate forms
1.3.2 Other bodies of law
1.4 Law Versus Contract in Corporate Affairs
1.4.1 Mandatory laws versus default provisions
1.4.2 Legal rules versus contract
1.4.3 Regulatory competition
1.5 What is the Goal of Corporate Law?
1.6 What Forces Shape Corporate Law?
1.6.1 Patterns of corporate ownership
1.6.2 International competition
1.6.3 Cross-jurisdictional coordination
2 Agency Problems and Legal Strategies
John Armour, Henry Hansmann, and Reinier Kraakman
2.1 Three Agency Problems
2.2 Legal Strategies for Reducing Agency Costs
2.2.1 Regulatory strategies
2.2.2 Governance strategies
2.2.3 Ex post and ex ante strategies
2.3 Compliance and Enforcement
2.3.1 Enforcement and intervention
2.3.2 Modes of enforcement
2.4 Disclosure
2.5 Legal Strategies in Corporate Context
2.6 Systematic differences
3 The Basic Governance Structure: The Interests of Shareholders as a Class
Luca Enriques, Henry Hansmann, and Reinier Kraakman
3.1 Appointment Rights and Shareholder Interests
3.1.1 Managerial power and corporate boards
3.1.2 Nominating directors and the mechanics of voting
3.1.3 The power to remove directors
3.1.4 Facilitating collective action
3.2 The Trusteeship Strategy: Independent Directors
3.3 Board Structure and International Best Practices
3.3.1 National codes of best practices
3.3.2 Best practices and board structure
3.4 Decision Rights and Shareholder Interests
3.5 The Reward Strategy
3.6 Legal Constraints and Affiliation Rights
3.6.1 The constraints strategy
3.6.2 Corporate governance-related disclosure
3.7 Explaining Jurisdictional Similarities and Differences
4 The Basic Governance Structure: Minority Shareholders and Non-Shareholder Constituencies
Luca Enriques, Henry Hansmann, and Reinier Kraakman
4.1 Protecting Minority Shareholders
4.1.1 Minority shareholder appointment rights
4.1.2 Minority shareholder decision rights
4.1.3 The incentive strategy: trusteeship and equal treatment
4.1.4 Constraints and affiliation rights
4.2 Protecting Employees
4.2.1 Appointment and decision rights strategies
4.2.2 The incentives strategy
4.2.3 The constraints strategy
4.3 Explaining Jurisdictional Differences and Similarities
4.3.1 The law-on-the-books
4.3.2 The law in practice
5 Transactions with Creditors
John Armour, Gerard Hertig, and Hideki Kanda
5.1 Why Should Corporate Law Deal with Creditors?
5.1.1 Shareholder-creditor agency problems
5.1.2 Creditor-creditor coordination and agency problems
5.2 Solvent Firms
5.2.1 The affiliation strategy—mandatory disclosure
5.2.2 The rules strategy: legal capital
5.3 Distressed Firms
5.3.1 The standards strategy
5.3.2 Governance strategies
5.4 Ownership Regimes and Creditor Protection
5.4.1 Regulatory or contractual controls?
5.4.2 The role of bankruptcy law
5.4.3 Managerial incentives
6 Related-Party Transactions
Luca Enriques, Gerard Hertig, and Hideki Kanda
6.1 Why are Related-Party Transactions Permitted at All?
6.2 Legal Strategies for Related-Party Transactions
6.2.1 The affiliation strategy
6.2.2 Agent incentives strategies
6.2.3 Shareholder voting: the decision rights strategy
6.2.4 Prohibiting conflicted transactions: the rules strategy
6.2.5 The standards strategy: the duty of loyalty and group law
6.3 Ownership Regimes and Related-Party Transactions
7 Fundamental Changes
Edward Rock, Paul Davies, Hideki Kanda, and Reinier Kraakman
7.1 What are Fundamental Changes in the Relationship Among the Participants in the Firm?
7.2 Charter Amendments
7.2.1 The management-shareholder conflict in charter amendments
7.2.2 The majority-minority shareholder conflict in charter amendments
7.3 Share Issuance
7.3.1 The manager-shareholder conflict
7.3.2 The majority-minority conflict
7.4 Mergers
7.4.1 The management-shareholder conflict in mergers
7.4.2 The majority-minority shareholder conflict in mergers (including freeze-out mergers)
7.4.3 The protection of non-shareholder constituencies in mergers
7.5 Corporate Divisions and Sales of Assets
7.5.1 The manager-shareholder conflict in divisions
7.5.2 The protection of non-shareholder constituencies in divisions
7.6 Reincorporation
7.7 Voluntary Liquidation
7.8 General Provisions on Significant Transactions
7.9 Explaining Differences in the Regulation of Significant Corporate Changes
8 Control Transactions
Paul Davies and Klaus Hopt
8.1 Agency Problems in Control Transactions
8.1.1 Control transactions
8.1.2 Agency and coordination issues
8.2 Agency Problems Where There is No Controlling Shareholder
8.2.1 The decision rights choice: shareholders only or shareholders and board jointly
8.2.2 The ‘no frustration’ rule
8.2.3 Joint decision-making
8.2.4 Pre-bid defensive measures
8.2.5 Agency and coordination problems of target shareholders when there is no controlling shareholder
8.3 Agency Issues Upon Acquisition from an Existing Controlling Shareholder
8.3.1 Exit rights and premium-sharing
8.3.2 Facilitating bids for controlled companies
8.4 Acquisition of Non-Accepting Minorities
8.5 Agency Problems of Non-Shareholder Groups
8.6 Explaining Differences in the Regulation of Control Transaction
9 Issuers and Investor Protection
Gerard Hertig, Reinier Kraakman, and Edward Rock
9.1 The Objectives of Investor Protection
9.2 Investor Protection and Legal Strategies
9.2.1 The paradigmatic entry strategy: mandatory disclosure
9.2.2 Quality controls: governance and regulatory strategies
9.3 Enforcement of Investor Protection Strategies
9.3.1 Private enforcement
9.3.2 Public enforcement
9.3.3 Gatekeeper enforcement
9.3.4 The informativeness of financial reports
9.4 Ownership Regimes and Investor Protection
10 Beyond the Anatomy
Paul Davies, Luca Enriques, Gerard Hertig, Klaus Hopt, and Reinier Kraakman
10.1 Ownership Structures and Agency Problems
10.1.1 The managers-shareholders conflict
10.1.2 The controlling-minority shareholders conflict
10.1.3 The shareholders-non shareholders conflict
10.2 Looking Forward
Index
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