2 week

Question 1

Business Organizations

Answer 1

is an expression that it is intended to embrace the way business activity can be organized and run under Corporate Law

Question 2

Partnerships

Answer 2

entity (formally) separated from the partners organization based on individuals who:
Interpersonal and fiduciary relationships amongst partners are of the essence for the structure and management of Partnerships. Weak Form of Entity Shielding

Question 3

Companies

Answer 3

legal entities (form of organizations) with Strong Separate Legal Entity and Limitation of Responsibility (for Equity-holders)

Question 4

Binding

Answer 4

Obligation that cannot be altered by privates

Question 5

PLC (Public company )

Answer 5

company that emphasizes the typical characteristics of a company with shares (“S.p.A.”):
with shared ownership of the capital
with freely tradable shares
potentially with a large and undefined number of shareholders
with an inbred dissociation between the status of shareholder and company’s management
with capitals mostly raised on stock exchange markets

Question 6

Private Company:

Answer 6

ownership (of the capital) is aimed at entrepreneurial investment
individual investment is at high threshold
individual interest in information/monitoring is (proportionally to the investment) intensive
investing in information/monitoring (in Corporate Governance) is affordable
information is un-needed on recurring basis (long-term and stable investment decisions

Question 7

How many shares does such a company has?

Answer 7

Dependson the nominal value of a single share

Question 8

Nominal Value

Answer 8

Initial amount of capital

Question 9

stock exchange price

Answer 9

Price pay in between the seller and the buyer of the share, nothing to do with the company

Question 10

Residual claimers

Answer 10

share holders that are pay after all the other obbligations are fully covered by the company

Question 11

(U.S. system)

Answer 11

Widely held Corporations» (company’s shares are held by a great and dispersed number of individuals)

Question 12

(E.U. system)

Answer 12

«Closely held Corporations» (company’s shares are held by a smaller and more concentrated number of holders (stable “blocking equity-stakes”)

Question 13

Private Company Law based

Answer 13

“networks of contracts”: missing a market, potentiated Voice rights (ex ante) and Exit rights (Appraisal right)

Question 14

Common Between PCL & Private

Answer 14

Legal personality
Limited liability
Investor Ownership
Delegated management
Transferable shares

Question 15

Legal personality

Answer 15

The firm serves as a single contracting party that is distinct from the various individuals who own and/or manage the firm (a «nexus for contracts») (Kraakman at al., 2009): Separate Entity (rights and liabilities pertain to the firm) with Separate Patrimony (pool of assets that are distinct from other assets owned, singly or jointly, by the firm’s owners)

Question 16

Separate Entity:

Answer 16

the firm operates with third parties by means of specific designated individuals who have authority to act in the name of the firm
the law provides for procedures by which both the firm and counterparties can bring lawsuits

Question 17

a Separate Patrimony (“Entity Shielding” Function):

Answer 17

firm’s rights of ownership company’s assets

company’s assets unavailable for attachment by personal creditors of firm’s owners

Question 18

Limited liability:

Answer 18

Business creditors are limited to making claims against assets that are held in the name of (“owned by”) firm itself and have no claim against assets that the firm’s shareholders hold in their own names
Limited liability shields the firm’s owners – the shareholders – from creditors’ claims

to isolate different line of business
to share (and reduce) the risks
to grant flexibility in the allocation of risk and return between equity-holders and debt-holders
to facilitate tradability of firm’s shares
to facilitate “delegated management”

Question 19

Investor ownership and shares:

Answer 19

Shared ownership tailored by contribution of capital: ownership rights proportionally tied to the amount of investment of capital contributed to the firm
each equity interest in the company is standardized and shaped on the basis of a nominal value equally assigned to all shares
each share normally bears equal rights and duties
different rights can be attributed only to different classes of shares
rights and duties are incorporated in the share and pass on with shares transfers
each share is therefore fungible with any other share (of the same class)

Question 20

Delegated management with a board structure:

Answer 20

Authority over corporate affairs typically (and mandatorily) dissociated from the status of shareholders and vested in a separate and special office/body: board of directors (managing function); board of auditors (supervising and monitoring function).

Question 21

board of directors

Answer 21

managing function

Question 22

board of auditors

Answer 22

supervising and monitoring function

Question 23

Managing Body

Answer 23

the managing organ is the “bailee” of the firm’s general government, separate from the operational and day-to-day (hired) managers/officers of the corporation:
the organ is elected by the firm’s shareholders (exception: Mitbestimmung in Germany)
the organ is formally distinct from the firm’s shareholders and is the exclusive depositary of managing activity
the organ is ordinarily a multiple members board: this enhances (and facilitates) mutual monitoring and checks idiosyncratic decision-making, while enriching skills and professional qualification of the managing board as a whole (Board’ Diversity)

Question 24

Two-tier system

Answer 24

Dualistic System

Question 25

Single-tier system

Answer 25

Monistic System

Question 26

Three-tier system

Answer 26

Latin System

Question 27

Transferable shares:

Answer 27

Free Transferability:
permits the firm to conduct business uninterruptedly as the identity of her owners changes.
maximizes the liquidity of shareholdings
maximizes the ability of shareholders to diversify their investments
grants the firm maximal flexibility in raising capital (on stock exchange markets)
Strong-form legal personality – limited liability – transferable shares tend to go together and are all features of the standard corporate form worldwide

Question 28

segmentation and limitation of the risk together with easy exit

Answer 28

the risk of the investment can be ax ante limited (stop loss rule)
the investment can be easily disposable
the evaluation of the right shares price too is less expensive

Question 29

segmentation and limitation of the risk together with delegated management

Answer 29

each investment does not require individual commitments in firm’s management
changes in the ownership do not diminish firm’s reliability in obtaining finance
changes in the ownership prevent shareholders from negative externalities

Question 30

by Laws

Answer 30

Refers to Statute (rules how the goverment is govern

Question 31

Comply or Explain

Answer 31

They can embody the reccomendation of the Europe court, they are free of not follow but the will have to explain

Question 32

Market of Captial

Answer 32

Stock exchange market

Question 33

Market for corporate control

Answer 33

power of influicing how the coporate is managed

Question 34

Rules for having good corporate control

Answer 34

1. transparency on qualify treasure ownership

2. mandatory public offer (opportunity to sell)

Question 35

Mandatoriry premiun price

Answer 35

Usually 33% higher that normal price on stock exchange, you are not just buying share you are also buying the voting power