How can we consider the role of the minority shareholders that own 55% of shares? What is their position relative to the one of the coalition built by the shareholder agreement?
I can answer providing the example of Telco s.p.a. which consisted in the coalition which controlled Telecom Italia until the recent acquisition by Telefonica. Telco mainly was a shareholder agreement with one "strong party" (Telefonica with almost 40% of shares) and a group of investing parties (italian banks such as Intesa San Paolo and Mediobanca and Generali that is an insurance company). Even if Telecom Italia's ownership structure had 54.51% of foreign institutional investors, they had secondary voice in the decision of selling the controlling shares to Telefonica. The coalition within Telco s.p.a. has been the main actor in this transaction.
minority shareholders have a dispersed ownership and even if they reach the 55% of shares it doesn't mean that they have the control power because there is a coalition of others shareholders that decided to sign the agreement to become the controlling party of the company. By the way the controlling party should pursue also their interests but it is possible that minority shareholders will not have so much effort to control them because their return will be low. The only interest they have is about remuneration and their decisions could be related to the exit right or to be active and becoming activist shareholders.
I'm agree with Cristina. Minority shareholders are often effectively deprived of any real say in the running of the company, and they may find that the company is run in a way which benefits the majority at their expense. The “minority” may have more shares, but lack control due to how the company is structured: for example, they may include non-voting shareholders.
Minority shareholders even if they own together the larger part of shares have to be considered as single entities with no control power and very low appointig rights on the board of directors members so the only influence they can exert is through their activism.
Well, minority shareholders having 55 % in a situation of contestability of control could become important using agreements. But there are cases, as we studied in Mediaset, where although hostile takeovers may take place socio-political enviroments may not allow this
If we are considering a public company, is it possible that the shares in the hands of minority shareholders are dispersed among thousand of investors, which make it impossible the coordination among them with the purpose of taking the control of the company.
In this case the minority shareholders control the business of H4 since, thanks to thei agreement, they own 55% of shares. usually minority shareholders are interested only in short term remunaration, without taking into account the long-run survival of the firm. Actually the minority shareholders have a dispersed ownership, so it is quite impossible that they could take the control of the company.
It depends on how many shares are owned by each shareholder. If a minority shareholder owns enough share he/she can enter in the coalition or create a coalition with some of the other holdings. Anyway I agree with Alberto in most of the cases it depends on their activism.
By picture only, we can assume that "minority shareholders" have less than 12% each. Now, if this is true, it's not difficult to state that a coalition between three majority shareholders it's easier to achieve (in the reality) than an agreement among X minority (and probably dispersed) shareholders. So in this case, in my opinion, the firm could be controlled by H1, H2, H3 but only in 'coalition mode'.
I agree with my colleagues, the minority shareholders have to be considered as controlling party only if they are active and interested to the company's life (maybe forming a coalition amongh them). In this case we don't have information to say if they are active or not, but probably the minority ownership is so dispersed that the controlling party will be the coalition of 45%.
If we have a look to the minority shareholders, we can notice that they have a dispersed ownership and they reach the 55% of shares, but this is not sufficient to say that they have the control power because there is a coalition of others shareholders that decided to sign the agreement to become the controlling party of the company. The controlling party should pursue the interests of all the shareholders but it is possible that minority shareholders will not have so much effort to control them because their return will be low. In the case that the controlling party will not persue the interest of all of the shareholders we can say that their only interest will be about remuneration.
They are minority shareholders so their relevance inside the company is not so much, actually only with a shareholders agreement thay can became relevant with shareholders activism
They hold 55% of the capital stock, but they have a dispersed ownership. So, we should evaluate their activism in the shareholders meeting in order to classify them as qualified or not qualified minority shareholders!!
The group of minority shareholders shows a scattered ownership, thus even if they have a 55%-shares of the firm, it does not give them the power to control and veto the remaining shareholders. The alignment of various interests states an immense challenge which has to be overcome in order to find a consensus giving them a slight chance to exert power.
The ultimate controlling party if the coalition decides to give the control to H2 is the phisical person that owns H2, an individual, a family or the state. We can make some hypothesis ...
I agree with Arianna, in this case the natural person that controls H2 will be the ultimate controlling party. The coalition is made in order to ensure the control of the company. With it indeed, is hard to control the firm since H2 and H3 could make an agreement and take away the control from H1 that in a situation in which no coalition is formed, is the one that owns more shares.
If the controlling firm decides to give control only to H2 after an agreement, the ultimate controlling party will be the phisical person who owns H2 but it is important to analyze if H2 is controlled by a family, by a public company or by the state. In class we talked also about consolidation. what does it mean?
Consolidation is the practice of legally combining two or more organizations into a single new one. Upon consolidation, the original organizations cease to exist and are replaced by a new entity. We've seen in class that if a coalition between firms exists, and power is not given to a single organization wiithin the coalition itself, no consolidation exists: in fact ONLY ONE singular firm can consolidate another one. Instead , in this case, on the grounds that H2 is the ultimate controlling party , it has to consolidate H4.
If the shareholders' coalition decide to give the control to H2 the ultimate controlling party is the natural person who control H2. H2 is just the direct control party since the concept of ultimate controlling party refers to a natural person (human being).
Since in this case the controlling power is assigned to H2 in light of the shareholders agreement, we should make some hypothesis on who is behind the H2 to understand the natural person behind it. H2 might be controlled by a) politicians (State), b) family (in case of a family owned company); c) managers (in case of a Public Company).
We know that the ultimate controlling party is always a natural person or group of persons, and not a legal entity. Therefore, if the controlling firms decide to give the control only to H2, the natural person who is in charge of controlling it, will be the ultimate controlling party!
The ultimate controlling party is the physical person that owns H2. Because the shareholder agreement decides so the other two holdings even if they have more shares than H2, they will not go against that.
Even if the situation you pictured still sounds strange to me, I agree with the clear answer provided above by Michele! The natural person behind all, in that case, would be the controller of H2.
I agree with my colleagues, in the case you pictured the ultimate controoling party would be the natural person that owns H2. However, if H2 is in turn a public company the ultimate controlling party would be the appointed CEO of this company.
When there is a shareholder agreement and therefore we have a coalition the ultimate controlling party is the coalition itself (actually the people that form the coalition). Anyway,if in the coalition the exclusive power to control is given to a specific party ( in this case H2)...this will be absolutely the ultimate controlling party. The reason is that in the first case no one involved in the shareholder agreement has the exclusive control of H4 whereas in the second case H4 is under the direct control of the coalition but the coalition is at the same time in the hand of H2. Moreover, if the ultimate controlling party is the coalition no one will consolidate h4 because a company can be consolidated only by a single controlling party. But if one of the member of the coalition has the exclusive control on H4 it will consolidate it( in our example H2 will consolidate H4).
If H1, H2 and H3 stay together and form a coalition they will of course acquire the control of H4. As discussed during the lecture, the coalition just formed, has the right to decide which of the 3 companies (h1,h2,h3) has the exclusive power to control H4, assuming in this way the role of ultimate controlling party. Moreover, H4 can be consolidated ONLY by the company of the coalition, that has the exclusive control on it (therefore the whole coalition does not consolidate h4).
In case of a shareholder agreement, the controlling party of H4 could be H1, H2 or H3; it depends by the choice that the coalition created makes. The agreement can be made among H1,H2 and H3; or between H1 and H2; or between H2 and H3; or between H1 and H3. In any case all these outcomes can achieve the control of the company.
Well since H1 and H2 and H3 form a coalition they decide which one of them with control exclusively H4. They can agree all together that is the 3 of them, or just 2 of them, its okay in all cases.
H4 is controlled by the coalition, but if the coalition decides to give control to a specific company, g.e. H3, the phisycal person who controls H3 is the utimate controlling party.
i agree with Federica , that H4 is already controlled by the coalition , but the decision still in the coalition side , if decides to give the control to H1or H2 or H3 , the physical person for one of them will be the ultimate controlling party
the shareholder agreement can be between H1 H2 or H3 all together but also just a couple of them. The shareholder agreement decides who has the control. If there is not any decision the ultimate controlling party is the coalition itself that is the only situation in which the ultimate controlling party is not a physical person.
If we think at what have been said in class, we can imagine that, in the coalition, there is always a dominant party who, in the forming process declares is will to assume the leadership. If the other parties agree, the coalition is formed. Now, how the mechanics of the coalition are structured, it is hard to say. Fact is that among the three entities, the most powerful in term of influence among the coalition will host the ultimate controlling party. I can imagine that in absolute parity, the UCP would have been the families behind the three companies.
I agree with my colleagues, the ultimate controlling party of H4 have to be reached and identified within the shareholders agreement between H1, H2 and H3.
Through a shareholders agreement both H1, H2, and H 3 can become the controlling party, but we have to take in consideration also the utility to do this agreement and the trust between the parties, also a counter offer by H 4 is a possibility that we don't have to exclude
H4 is controlled by coalition. Otherwise is possible a shareholder agreement to give the control to other firm. In that case the ultimate conrolling party will be the natural person behind, for example, H3, the firm choosen after the agreement.
If not differently stated the coalition is the actually controlls the group and there is not phisical person or family who controls the group. If the schareholder agreement provides the control in one of the two firms the ultimete controlling party of the group coincides with the person or family that controls such firm, could it be a manager if capital is widely held or a family otherwise.
In my opinion coalition the ultimate controlling party is the coalition itself, in this case no one is involved in the share holders agreement that are full control of H4.
Yes, moreover in the case you depicted there is no obligation to adopt the consolidatef financial statement. The consolidated financial statement would be adopted if the shareholder agreement assigned the control in the hand of an ultimate controlling party.
How can we define a "shareholder agreement"? is it regulated by specific documents or not? is it true that when there are a small number of shareholders it is common for them to supplement the constitutional document?
A shareholder agreement can simply be defined as a convergence of interests among some shareholders. Formally speaking, those agreements should be regulated and ratified by means of constitutional documents. However when the number of shareholders is relativelly small there it is not compelling to officially formalize the agreement.
Now I have a question for you. Go to Slide 202.In your view, who is the ultimate controlling party? (Tricky question)
It depends, if the shareholder agreement states which the controlling party is, the ultimate controlling party is the natural person who is in charge of the firm elected in the agreement. If, on the other hand, there is a coalition in the shareholder agreement, the ultimate controlling party is a coalition.
A shareholders' agreement is an agreement among the shareholders of a company. It is generally regulated by the constitutional documents of the company; however, where there are a relatively small number of shareholders it is often supplemented . There are a number of reasons why the shareholders may wish to supplement the constitutional documents of the company: to avoid public inspection ,to reduce costs, to reach greater flexibility or because law does not provide sufficient protection for minority shareholders.
in my opinion, an arrangement among a company's shareholders describing how the company should be operated and the shareholders' rights and obligations. It also includes information on the regulation of the shareholders' relationship, the management of the company, ownership of shares and privileges and protection of shareholders.
The shareholders' agreement is intended to make sure that shareholders are treated fairly and that their rights are protected.
The agreement includes sections outlining the fair and legitimate pricing of shares (particularly when sold). It also allows shareholders to make decisions about what outside parties may become future shareholders and provides safeguards for minority positions.
It is an arrangement among a company's shareholders that describes the way the company should be operated, specifing shareholders' rights and obligations. It is regulated by the constitutional documents of the company, but there's no need of formalization when the number of shareholders is small
It COULD be regulated in the constitutional documents. It SHOULD be, at least, supplemented in case of agreement. No Italian law rules about. So If the first two cases do not verify, sell all the shares you have in that company because you are risking too much and your rights are easily to be violated.
Arianna, a shareholders' agreement is an agreement amongst the shareholders of a company. As we have seen from the theory, the relationships amongst the shareholders and those between the shareholders and the company are regulated by the constitutional documents of the company, however, in cases in which there are a relatively small number of shareholders it is quite common in practice for the shareholders to supplement the constitutional document.
Simply stated, it is an agreement between firm and its shareholders. In the statement, the rules and regulations of behaviour are set out and depending on the size of the company, the agreement is more or less extensive.
I agree with Alberto. The shareholders agreement is a convergence of interests between shareholders and i don't think it is specifically regulated by law.
The shareholders' agreement is an agreement amongst the shareholders of a company, basically made in order to reach the majority and to have the control. Usually it is regulated by some costitutional documents of the company itself, but if there are a small number of shareholders these documents can be supplemented.
In case of a small number of shareholders we can suppose there will be a small number of minority shareholders, so a I think that there wouldn't be a shareholders agreement, instead is more possible an acquisition of share from other shareholders to become the unique shareholder
An interesting example is that one of Anheuser-Busch InBev (the bigger producer of beer Worldwide); where the two major "groups" (Brazilian and Belgian) in the ownership of the company, through two separate entities own a third entity that has the majority of the AB Inbev Shares. The Shareholder Agreement between them provides for equal voting and control rights of the two entities on the third entity, and, indirectly, over AB Inbev shares held by it, and it is easy to verify looking at the composition of the Board of Directors.
I agree with Federica, The shareholders' agreement is an agreement amongst the shareholders of a company, basically made in order to reach the majority and to have the control.
I agree that usually shareholders' agreements are used to reach majority. One particular shareholder agreement is the one involving Pirelli and Olimpia, where Pirelli agrees to appoint only the 50% of the board of directors, despite the ownership of more than 50%. In this way Olimpia can declare not to be directed by Pirelli. Pirelli has two advantages on this agreement: attenuate the perception of expropriation for minortity shareholders of Olimpia and the exclusion of the liability for damages in the subsidiary.
Lucio we have in the slides an example of shareholder agreement, in particular the one of Trevi holding. Answering to your second question, I am not sure but I think that Italian companies have to disclosure about the presence of shareholder agreements.
Please, ask questions to your colleagues using the Figure above and the theory discussed during the lesson
ReplyDeleteHow can we consider the role of the minority shareholders that own 55% of shares? What is their position relative to the one of the coalition built by the shareholder agreement?
ReplyDeleteI can answer providing the example of Telco s.p.a. which consisted in the coalition which controlled Telecom Italia until the recent acquisition by Telefonica. Telco mainly was a shareholder agreement with one "strong party" (Telefonica with almost 40% of shares) and a group of investing parties (italian banks such as Intesa San Paolo and Mediobanca and Generali that is an insurance company).
DeleteEven if Telecom Italia's ownership structure had 54.51% of foreign institutional investors, they had secondary voice in the decision of selling the controlling shares to Telefonica. The coalition within Telco s.p.a. has been the main actor in this transaction.
minority shareholders have a dispersed ownership and even if they reach the 55% of shares it doesn't mean that they have the control power because there is a coalition of others shareholders that decided to sign the agreement to become the controlling party of the company. By the way the controlling party should pursue also their interests but it is possible that minority shareholders will not have so much effort to control them because their return will be low.
DeleteThe only interest they have is about remuneration and their decisions could be related to the exit right or to be active and becoming activist shareholders.
I'm agree with Cristina. Minority shareholders are often effectively deprived of any real say in the running of the company, and they may find that the company is run in a way which benefits the majority at their expense. The “minority” may have more shares, but lack control due to how the company is structured: for example, they may include non-voting shareholders.
DeleteMinority shareholders even if they own together the larger part of shares have to be considered as single entities with no control power and very low appointig rights on the board of directors members so the only influence they can exert is through their activism.
DeleteWell, minority shareholders having 55 % in a situation of contestability of control could become important using agreements. But there are cases, as we studied in Mediaset, where although hostile takeovers may take place socio-political enviroments may not allow this
DeleteIf we are considering a public company, is it possible that the shares in the hands of minority shareholders are dispersed among thousand of investors, which make it impossible the coordination among them with the purpose of taking the control of the company.
DeleteIn this case the minority shareholders control the business of H4 since, thanks to thei agreement, they own 55% of shares. usually minority shareholders are interested only in short term remunaration, without taking into account the long-run survival of the firm. Actually the minority shareholders have a dispersed ownership, so it is quite impossible that they could take the control of the company.
DeleteThe role of minority shareholders depends on their level of activism. So the proper answer I would say it is "It depends".
DeleteIt depends on how many shares are owned by each shareholder. If a minority shareholder owns enough share he/she can enter in the coalition or create a coalition with some of the other holdings. Anyway I agree with Alberto in most of the cases it depends on their activism.
DeleteI agree with Alberto: even though minority shareholders own the 55%, their role depends on their activism.
DeleteBy picture only, we can assume that "minority shareholders" have less than 12% each. Now, if this is true, it's not difficult to state that a coalition between three majority shareholders it's easier to achieve (in the reality) than an agreement among X minority (and probably dispersed) shareholders. So in this case, in my opinion, the firm could be controlled by H1, H2, H3 but only in 'coalition mode'.
DeleteI agree with my colleagues, the minority shareholders have to be considered as controlling party only if they are active and interested to the company's life (maybe forming a coalition amongh them). In this case we don't have information to say if they are active or not, but probably the minority ownership is so dispersed that the controlling party will be the coalition of 45%.
DeleteIf we have a look to the minority shareholders, we can notice that they have a dispersed ownership and they reach the 55% of shares, but this is not sufficient to say that they have the control power because there is a coalition of others shareholders that decided to sign the agreement to become the controlling party of the company.
DeleteThe controlling party should pursue the interests of all the shareholders but it is possible that minority shareholders will not have so much effort to control them because their return will be low. In the case that the controlling party will not persue the interest of all of the shareholders we can say that their only interest will be about remuneration.
They are minority shareholders so their relevance inside the company is not so much, actually only with a shareholders agreement thay can became relevant with shareholders activism
DeleteMinority shareholders has not enough control power, If they can gain it, they cant control the firm because of other shareholders' coalition...
DeleteThey hold 55% of the capital stock, but they have a dispersed ownership. So, we should evaluate their activism in the shareholders meeting in order to classify them as qualified or not qualified minority shareholders!!
DeleteThe group of minority shareholders shows a scattered ownership, thus even if they have a 55%-shares of the firm, it does not give them the power to control and veto the remaining shareholders. The alignment of various interests states an immense challenge which has to be overcome in order to find a consensus giving them a slight chance to exert power.
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ReplyDeleteWho is the ultimate controlling party if, after a shareholders agreement, controlling firms decide to give control only to H2? And why?
ReplyDeleteThe ultimate controlling party if the coalition decides to give the control to H2 is the phisical person that owns H2, an individual, a family or the state. We can make some hypothesis ...
DeleteIf the shareholders agreement decide to give control to H2, so H2 is the ultimate controlling party.
DeleteI agree with Arianna, in this case the natural person that controls H2 will be the ultimate controlling party. The coalition is made in order to ensure the control of the company. With it indeed, is hard to control the firm since H2 and H3 could make an agreement and take away the control from H1 that in a situation in which no coalition is formed, is the one that owns more shares.
DeleteI agree all of you guys, it would be the individual who owns H2
DeleteOf course it would be the individual or family who owns Hh2, since the ultimate owner must be a natural person.
DeleteIf the controlling firm decides to give control only to H2 after an agreement, the ultimate controlling party will be the phisical person who owns H2 but it is important to analyze if H2 is controlled by a family, by a public company or by the state.
DeleteIn class we talked also about consolidation. what does it mean?
Consolidation is the practice of legally combining two or more organizations into a single new one. Upon consolidation, the original organizations cease to exist and are replaced by a new entity. We've seen in class that if a coalition between firms exists, and power is not given to a single organization wiithin the coalition itself, no consolidation exists: in fact ONLY ONE singular firm can consolidate another one. Instead , in this case, on the grounds that H2 is the ultimate controlling party , it has to consolidate H4.
DeleteIf the coalition declares that H2 has control, the ultimate controlling party is the natural person who control H2.
DeleteIf the shareholders' coalition decide to give the control to H2 the ultimate controlling party is the natural person who control H2. H2 is just the direct control party since the concept of ultimate controlling party refers to a natural person (human being).
DeleteSince in this case the controlling power is assigned to H2 in light of the shareholders agreement, we should make some hypothesis on who is behind the H2 to understand the natural person behind it.
DeleteH2 might be controlled by a) politicians (State), b) family (in case of a family owned company); c) managers (in case of a Public Company).
We know that the ultimate controlling party is always a natural person or group of persons, and not a legal entity. Therefore, if the controlling firms decide to give the control only to H2, the natural person who is in charge of controlling it, will be the ultimate controlling party!
Deleteit depends on shareholder's coalition , if they decide to give control to H2 , the ultimate controlling party will be the owner of H2
DeleteThe ultimate controlling party is the physical person that owns H2. Because the shareholder agreement decides so the other two holdings even if they have more shares than H2, they will not go against that.
DeleteIn my view, the ultimate controlling party is the natural person who control H2 if the coalition declares that H2 has control
DeleteI agree with Arianna, in that the ultimate controlling party has to be a natural person
DeleteH2 is the ultimate controlling party if the shareholders agreement gives control to H2. Of course should be a natural person.
DeleteThe ultimate controlling party is the natural person controlling H2, if the coalition decides to give control to H2.
DeleteEven if the situation you pictured still sounds strange to me, I agree with the clear answer provided above by Michele! The natural person behind all, in that case, would be the controller of H2.
DeleteOf course in this case the physical person who owns H2 will be the Ultimate Controlling Party
DeleteI agree with my colleagues, in the case you pictured the ultimate controoling party would be the natural person that owns H2. However, if H2 is in turn a public company the ultimate controlling party would be the appointed CEO of this company.
DeleteH2 is the ultimate controlling party according with my colleagues.
DeleteAs you said in the question the ultimate controlling party will be the natural person that owns H2.
DeleteThe ultimate controlling party will be most probably the natural person that control h2
DeleteEverything depends on Shareholders' agreement
DeleteFrom my oponion, the ultimate controlling party has to be a natural person
DeleteIn this case it is the natural person who controls H2
DeleteWhen there is a shareholder agreement and therefore we have a coalition the ultimate controlling party is the coalition itself (actually the people that form the coalition). Anyway,if in the coalition the exclusive power to control is given to a specific party ( in this case H2)...this will be absolutely the ultimate controlling party. The reason is that in the first case no one involved in the shareholder agreement has the exclusive control of H4 whereas in the second case H4 is under the direct control of the coalition but the coalition is at the same time in the hand of H2. Moreover, if the ultimate controlling party is the coalition no one will consolidate h4 because a company can be consolidated only by a single controlling party. But if one of the member of the coalition has the exclusive control on H4 it will consolidate it( in our example H2 will consolidate H4).
ReplyDeleteWhat could be all the outcomes of a shareholder agreement? who does control H4?
ReplyDeleteIf H1, H2 and H3 stay together and form a coalition they will of course acquire the control of H4. As discussed during the lecture, the coalition just formed, has the right to decide which of the 3 companies (h1,h2,h3) has the exclusive power to control H4, assuming in this way the role of ultimate controlling party. Moreover, H4 can be consolidated ONLY by the company of the coalition, that has the exclusive control on it (therefore the whole coalition does not consolidate h4).
DeleteIn case of a shareholder agreement, the controlling party of H4 could be H1, H2 or H3; it depends by the choice that the coalition created makes. The agreement can be made among H1,H2 and H3; or between H1 and H2; or between H2 and H3; or between H1 and H3. In any case all these outcomes can achieve the control of the company.
DeleteWell since H1 and H2 and H3 form a coalition they decide which one of them with control exclusively H4. They can agree all together that is the 3 of them, or just 2 of them, its okay in all cases.
DeleteH1, H2 and H3 should decide who would control H4. This is part of the shareholders agreement.
DeleteIn this case we have a coalition. So, no company consolidates H4 unless one of the coalition member has the exclusive control on H4.
DeleteH4 is controlled by the coalition, but if the coalition decides to give control to a specific company, g.e. H3, the phisycal person who controls H3 is the utimate controlling party.
Deletei agree with Federica , that H4 is already controlled by the coalition , but the decision still in the coalition side , if decides to give the control to H1or H2 or H3 , the physical person for one of them will be the ultimate controlling party
Deletethe shareholder agreement can be between H1 H2 or H3 all together but also just a couple of them. The shareholder agreement decides who has the control. If there is not any decision the ultimate controlling party is the coalition itself that is the only situation in which the ultimate controlling party is not a physical person.
DeleteI think in this case H1, H2, H3 do control H4 and they are the parts of the shareholders agreement
DeleteIf we think at what have been said in class, we can imagine that, in the coalition, there is always a dominant party who, in the forming process declares is will to assume the leadership. If the other parties agree, the coalition is formed. Now, how the mechanics of the coalition are structured, it is hard to say. Fact is that among the three entities, the most powerful in term of influence among the coalition will host the ultimate controlling party. I can imagine that in absolute parity, the UCP would have been the families behind the three companies.
DeleteI agree with my colleagues, the ultimate controlling party of H4 have to be reached and identified within the shareholders agreement between H1, H2 and H3.
DeleteThrough the shareholders agreement (made by H1, H2 and H3) we will be able to know who is the ultimate controlling party of H4.
DeleteThrough a shareholders agreement both H1, H2, and H 3 can become the controlling party, but we have to take in consideration also the utility to do this agreement and the trust between the parties, also a counter offer by H 4 is a possibility that we don't have to exclude
DeleteCoalition controls H4. If Coalition decides that, to give control H3, in this case Ultimate controlling party is H3
DeleteH4 is controlled by coalition. Otherwise is possible a shareholder agreement to give the control to other firm. In that case the ultimate conrolling party will be the natural person behind, for example, H3, the firm choosen after the agreement.
DeleteIf not differently stated the coalition is the actually controlls the group and there is not phisical person or family who controls the group. If the schareholder agreement provides the control in one of the two firms the ultimete controlling party of the group coincides with the person or family that controls such firm, could it be a manager if capital is widely held or a family otherwise.
DeleteIn my opinion coalition the ultimate controlling party is the coalition itself, in this case no one is involved in the share holders agreement that are full control of H4.
ReplyDeleteYes, moreover in the case you depicted there is no obligation to adopt the consolidatef financial statement. The consolidated financial statement would be adopted if the shareholder agreement assigned the control in the hand of an ultimate controlling party.
DeleteHow can we define a "shareholder agreement"? is it regulated by specific documents or not? is it true that when there are a small number of shareholders it is common for them to supplement the constitutional document?
ReplyDeleteA shareholder agreement can simply be defined as a convergence of interests among some shareholders. Formally speaking, those agreements should be regulated and ratified by means of constitutional documents. However when the number of shareholders is relativelly small there it is not compelling to officially formalize the agreement.
DeleteNow I have a question for you. Go to Slide 202.In your view, who is the ultimate controlling party? (Tricky question)
It depends, if the shareholder agreement states which the controlling party is, the ultimate controlling party is the natural person who is in charge of the firm elected in the agreement. If, on the other hand, there is a coalition in the shareholder agreement, the ultimate controlling party is a coalition.
DeleteA shareholders' agreement is an agreement among the shareholders of a company. It is generally regulated by the constitutional documents of the company; however, where there are a relatively small number of shareholders it is often supplemented . There are a number of reasons why the shareholders may wish to supplement the constitutional documents of the company: to avoid public inspection ,to reduce costs, to reach greater flexibility or because law does not provide sufficient protection for minority shareholders.
Deletein my opinion, an arrangement among a company's shareholders describing how the company should be operated and the shareholders' rights and obligations. It also includes information on the regulation of the shareholders' relationship, the management of the company, ownership of shares and privileges and protection of shareholders.
DeleteThe shareholders' agreement is intended to make sure that shareholders are treated fairly and that their rights are protected.
The agreement includes sections outlining the fair and legitimate pricing of shares (particularly when sold). It also allows shareholders to make decisions about what outside parties may become future shareholders and provides safeguards for minority positions.
It is an arrangement among a company's shareholders that describes the way the company should be operated, specifing shareholders' rights and obligations. It is regulated by the constitutional documents of the company, but there's no need of formalization when the number of shareholders is small
DeleteIt COULD be regulated in the constitutional documents. It SHOULD be, at least, supplemented in case of agreement. No Italian law rules about. So If the first two cases do not verify, sell all the shares you have in that company because you are risking too much and your rights are easily to be violated.
DeleteShareholder agreement is like convergence of interests and describe a way the company should be operated.
DeleteArianna, a shareholders' agreement is an agreement amongst the shareholders of a company.
DeleteAs we have seen from the theory, the relationships amongst the shareholders and those between the shareholders and the company are regulated by the constitutional documents of the company, however, in cases in which there are a relatively small number of shareholders it is quite common in practice for the shareholders to supplement the constitutional document.
Simply stated, it is an agreement between firm and its shareholders. In the statement, the rules and regulations of behaviour are set out and depending on the size of the company, the agreement is more or less extensive.
DeleteA shareholder agreement I think have to be sign by parties, so there will be also a document
DeleteI agree with Alberto. The shareholders agreement is a convergence of interests between shareholders and i don't think it is specifically regulated by law.
DeleteThe shareholders' agreement is an agreement amongst the shareholders of a company, basically made in order to reach the majority and to have the control. Usually it is regulated by some costitutional documents of the company itself, but if there are a small number of shareholders these documents can be supplemented.
ReplyDeleteCan you give some practical examples of firm with shareholder agreement? Is it easy to verify that a company really have it?
DeleteOn my view the most simple example are the company public held. In this case there is always a shareholders agreement to elect the Board of Directors.
DeleteIn case of a small number of shareholders we can suppose there will be a small number of minority shareholders, so a I think that there wouldn't be a shareholders agreement, instead is more possible an acquisition of share from other shareholders to become the unique shareholder
DeleteAn interesting example is that one of Anheuser-Busch InBev (the bigger producer of beer Worldwide); where the two major "groups" (Brazilian and Belgian) in the ownership of the company, through two separate entities own a third entity that has the majority of the AB Inbev Shares. The Shareholder Agreement between them provides for equal voting and control rights of the two entities on the third entity, and, indirectly, over AB Inbev shares held by it, and it is easy to verify looking at the composition of the Board of Directors.
DeleteI agree with Federica, The shareholders' agreement is an agreement amongst the shareholders of a company, basically made in order to reach the majority and to have the control.
DeleteI agree that usually shareholders' agreements are used to reach majority. One particular shareholder agreement is the one involving Pirelli and Olimpia, where Pirelli agrees to appoint only the 50% of the board of directors, despite the ownership of more than 50%. In this way Olimpia can declare not to be directed by Pirelli. Pirelli has two advantages on this agreement: attenuate the perception of expropriation for minortity shareholders of Olimpia and the exclusion of the liability for damages in the subsidiary.
DeleteLucio we have in the slides an example of shareholder agreement, in particular the one of Trevi holding. Answering to your second question, I am not sure but I think that Italian companies have to disclosure about the presence of shareholder agreements.
ReplyDeletetalking about other topics...according to the theory we studied is it good to have a single objective or is better to have multiple ones?
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