Show Summary Details

Page of

PRINTED FROM OXFORD HANDBOOKS ONLINE (www.oxfordhandbooks.com). © Oxford University Press, 2018. All Rights Reserved. Under the terms of the licence agreement, an individual user may print out a PDF of a single chapter of a title in Oxford Handbooks Online for personal use (for details see Privacy Policy and Legal Notice).

date: 18 June 2019

Abstract and Keywords

This chapter examines the legal and policy implications of transactions between a corporation and a “related party.” It begins by spelling out the reasons why related party transactions (RPTs) are a common phenomenon worldwide before discussing RPTs as an instrument for tunneling and why many jurisdictions provide for specific regulations on RPTs in addition to general rules or standards against dominant shareholders’ abuse. It then looks at the legal tools that can prevent the use of RPTs for tunneling purposes, namely: prohibitions, procedural safeguards such as majority of the minority shareholder approval and independent directors’ involvement, mandatory disclosure, external fairness opinions, and ex post standard-based judicial review. Finally, the chapter discusses the challenges of enacting reforms that would make regulation of RPTs (or tunneling) more effective in preventing (minority) shareholder expropriation, and suggests the importance of sophisticated enforcement actors such as experienced courts and/or active, committed securities regulators in battling tunneling as a business practice.

Keywords: tunneling, related party transactions, dominant shareholders majority of the minority approval, independent directors, mandatory disclosure, fairness opinions, corporate law enforcement

Access to the complete content on Oxford Handbooks Online requires a subscription or purchase. Public users are able to search the site and view the abstracts and keywords for each book and chapter without a subscription.

Please subscribe or login to access full text content.

If you have purchased a print title that contains an access token, please see the token for information about how to register your code.

For questions on access or troubleshooting, please check our FAQs, and if you can''t find the answer there, please contact us.