Corporate governance and capital market transactions in Switzerland: the mechanics of mergers, acquisitions, buyouts, private equity transactions and restructuring and their impact on the governance of corporations under Swiss law
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| Format: | Abschlussarbeit Buch |
| Sprache: | English |
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Zürich [u.a.]
Schulthess
2005
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| Online-Zugang: | Inhaltsverzeichnis |
| Beschreibung: | LXXVI, 417 S. graph. Darst. |
| ISBN: | 3725549028 |
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| 049 | |a DE-M382 | ||
| 100 | 1 | |a Bohrer, Andreas |e Verfasser |4 aut | |
| 245 | 1 | 0 | |a Corporate governance and capital market transactions in Switzerland |b the mechanics of mergers, acquisitions, buyouts, private equity transactions and restructuring and their impact on the governance of corporations under Swiss law |c Andreas Bohrer |
| 264 | 1 | |a Zürich [u.a.] |b Schulthess |c 2005 | |
| 300 | |a LXXVI, 417 S. |b graph. Darst. | ||
| 336 | |b txt |2 rdacontent | ||
| 337 | |b n |2 rdamedia | ||
| 338 | |b nc |2 rdacarrier | ||
| 502 | |a Zugl.: Zürich, Univ., Habil.-Schr. | ||
| 655 | 7 | |0 (DE-588)4113937-9 |a Hochschulschrift |2 gnd-content | |
| 751 | |a Zürich |4 uvp | ||
| 856 | 4 | 2 | |m HBZ Datenaustausch |q application/pdf |u http://bvbr.bib-bvb.de:8991/F?func=service&doc_library=BVB01&local_base=BVB01&doc_number=014680564&sequence=000002&line_number=0001&func_code=DB_RECORDS&service_type=MEDIA |3 Inhaltsverzeichnis |
| 999 | |a oai:aleph.bib-bvb.de:BVB01-014680564 | ||
Datensatz im Suchindex
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| adam_text | XI
TABLE OF CONTENTS
PART I THE BASIC CONCEPT OF CORPORATE GOVERNANCE
§ 1 An Introduction to Corporate Governance 3
1. Separation of Ownership and Control 5
1.1. The Classical Approach: Management Control 5
1.2. Combinations of Ownership and Control Structures 6
1.3. The European Approach: Blockholder Control 8
1.4. Separation of Ownership and Control in Europe 8
2. Different Systems of Capital Markets and Ownership Structure... 9
3. The Corporation and its Purpose 13
3.1. The Development of Corporations 14
3.2. Characteristics of a Corporation 16
3.2.1. Centralized Management 16
3.2.2. Limited Liability 17
3.2.2.1. Limited Liability Reduces Monitoring Costs 17
3.2.2.2. Limited Liability Reduces Transaction Costs 18
3.2.2.3. Downsides of Limited Liability 18
3.3. Purpose and Objective of a Corporation 18
§ 2 Economic Aspects of Corporate Governance 23
1. Theoretical Foundations 23
1.1. Theory of the Firm: The Separation of Ownership and Control 23
1.1.1. Neoclassical Economics ( Chicago School ) 23
1.1.2. Managerialists 25
1.1.3. Transaction Cost School 25
1.2. Theory of Capital Markets 27
2. Systematical Approach to Corporate Governance 28
2.1. Internal and External Governance Factors 29
XII 2.2. Sources of Corporate Governance: Legal Rules, Economic Incentives
and Reputation 29
2.3. Structural, Process Oriented, and Transactional View 30
3. Development of Corporate Governance 30
3.1. Overview ™
3.2. The Rise of Institutional Investors and Governance Activism 31
3.2.1. Governance Activism 3 j
3.2.2. CalPERS An Example of Shareholder Activism.. . ...... .............33
3.3. Globalization of Corporate Governance 33
3.3.1. Harmonization of Corporate Governance Standards 33
3.3.2. Economic Reasons for Investments in Foreign Corporations...!....36
§3 The Sources of Corporate Governance Rules 39
1. The Impact of Corporation Laws 39
1.1. The Race for the Bottom Debate 39
1.1.1 Theoretical Foundations 40
1.1.2. The Success of the Delaware General Corporati™ Law! ZZZZ.41
1.2. Enabling or Mandatory Rules? 1.2.1. The Contractarian Theory ZZ. 43
1.2.2. Arguments for and Counter arguments against a Mandatory Structure 1.2.3. The Impact of Mid stream Changes on Enabling or Mandatory Rules B
1.2.4. The Impact of Courts on Enabling ^dMandatoty r^sZZZZ.4S
2. The Impact of Financial Markets Regulation 48
2.1. Investor Protection versus Shareholder Protection 48
2.2. The OECD Principles of Corporate Governance ~. 48
2.3. U.S. Legislation 2.4. The Legal Framework in the European Union 51
2.5. The Legal Framework in Switzerland. sl
2.6. The Rules of SROs 2.6.1. The New York Stock Exchange o
2.6.2. The NASDAQ 52
2.6.3. The SWX Swiss Exchan ZZZZZZ. 53
2.7. Harmonization of Securities Regulation in a Global MarketTHIIsS
xm
3. Corporate Governance Guidelines and Principles 55
3.1. Guidelines of Public Companies 55
3.2. CalPERS Proposal for Core Principles and Guidelines 56
3.3. Statement of the Business Roundtable 56
3.4. Corporate Governance Guidelines and Codes of Best Practices 57
3.4.1. The Cadbury Report 58
3.4.2. The Hampel Report 58
3.4.3. The Combined Code 59
3.4.4. The German KonTraG 59
3.4.5. The U.S. Blue Ribbon Report 59
3.4.6. The Turnbull Report 60
3.4.7. The 2003 Combined Code on Corporate Governance 60
3.5. The Swiss Code of Best Practice 60
PART II A STRUCTURAL VIEW OF CORPORATE GOVERNANCE
§ 4 The Role of Shareholders 65
1. Elementary Rights of Shareholders under the OECD Principles.. 65
1.1. Voting Rights 65
1.2. Equal Treatment of Shareholders 66
1.3. Considerations under Swiss Law 66
2. Types of Shareholders 66
2.1. Institutional Investors 67
2.1.1. Economic Aspects 67
2.1.1.1. Benefits of Having Institutional Investors 67
2.1.1.2. Costs of Having Institutional Investors 67
2.1.1.3. Controlling Blockholders 68
2.1.2. Comparison of Law 69
2.1.2.1. The Role of Institutional Investors in the U.S. and Worldwide.69
2.1.2.2. The Shareholders Advisory Committee 69
2.1.3. Considerations under Swiss Law 70
3. Shareholder Derivative Suits 71
3.1. Economic Aspects 72
3.1.1. Costs of Derivative Suits 72
XIV 3.1.2. Benefits of Derivative Suits 73
3.2. Comparison of Law 73
3.2.1. U.S. Shareholder Litigation in Theory 73
3.2.2. U.S. Shareholder Litigation in Practice 74
3.2.3. Possibilities for Reform 76
3.3. Considerations under Swiss Law 76
3.4. Conclusion 78
§ 5 The Role of Directors 81
1. Responsibilities and Duties of the Board of Directors 82
1.1. Responsibilities and Duties in General 82
1. 2. Comparison of Law 82
1. 3. Considerations under Swiss Law 83
1.3.1. Internal Structure of a Corporation 83
1.3.2. Responsibilities of the Board of Directors 84
1.3.3. Duties of the Board 85
1.3.4. Rights of Board Members 86
1.3.5. Organization of the Board 87
1.3.6. Relationship towards Shareholders and Auditors 88
1.3.7. Due Consideration of Transactions 88
2. The Role of Independent Outside Directors 90
2.1. Empirical Data on Outside Directors in Swiss Corporations 91
2.2. Separation of Chairman and CEO 92
3. Structuring the Board through Committees 96
3.1. Audit Committee 96
3.2. Nominating Committee 97
3.3. Compensation Committee 98
3.4. Ad hoc Committees and Special Purpose Committees 99
3.5. Most common Board Committees of Swiss Corporations 99
4. Board Composition and Compensation 101
4.1. Market for Corporate Control 101
4.2. Composition of Swiss Boards of Directors 102
4.3. Board Compensation in Swiss Corporations 105
4.4. Number of Board Meetings per Year 109
XV
5. Advisory Boards as an Additional Governance Tool ? Ill
5.1. Types of Advisory Boards Ill
5.2. The Advisory Boards of Credit Suisse Group 111
6. Conclusion Ill
§6 The Role of Management 115
1. Executive Compensation 115
11. Compensation Schemes 115
1.2. The Use of Stock Options in the United States 116
1.3. U.S. style Executive Compensation for European Corporations? 118
1.4. Executive Compensation in Switzerland 119
1.4.1. Legal Framework for Equity Participation
Schemes in Switzerland 119
1 4.2. Empirical Data on Executive Compensation in Switzerland 120
2. Board Membership 121
2.1. Economic Aspects 122
2.2. Considerations and Conclusion 122
3. Disclosure of Information on Management 123
§ 7 The Role of Creditors and Other Stakeholders 125
1. Creditors, or the Concept of Bondholder Value 125
1 1. Agency Costs of Equity 125
1 2. Agency Costs of Debt 125
1 3. Concept of Bondholder Value 126
1 4. Protection of Creditors 127
2. Other Stakeholders 128
2.1. Economic Aspects 128
2.2. Considerations under Swiss Law 129
2.3. Conclusion 130
XVI PART III A PROCESS ORIENTED VIEW
OF CORPORATE GOVERNANCE
§ 8 The Decision making Process 137
1. One Share One Vote Principle 137
1.1. Dual Class Capitalization with Different Voting Power 138
1.1.1. Economic Aspects 139
1.1.2. Comparison of Law 140
1.1.3. Considerations under Swiss Law 141
1.2. Company s Stock held by its Subsidiary 141
1.2.1. Economic Aspects 141
1.2.2. Comparison of Law 141
1.2.3. Considerations under Swiss Law 142
1.3. Pyramidal Shareholdings 143
1.4. Crossholdings 145
1.4.1. Economic Aspects and Comparison of Law 145
1.4.2. Considerations under Swiss Law 147
1.5. Loops or Circular Ownership 148
1.5.1. Economic Aspects 148
1.5.2. Comparison of Law 148
1.5.3. Considerations under Swiss Law 148
1.6. Company s Stock held by its subsidiary Fund Manager Entity 149
1.6.1. Economic Aspects 149
1.6.2. Considerations under Swiss Law 149
1.7. Futures Contracts 150
1.7.1. Economic Aspects 150
1.7.2. Considerations under Swiss Law 150
1.8. Securities Lending 150
1.8.1. Economic Aspects 150
1.8.2. Considerations under Swiss Law 151
2. Special Voting Mechanics 151
2.1. Class Voting 151
2.1.1. Economic Aspects and Comparison of Law 151
2.1.2. Considerations under Swiss Law 151
2.2. Cumulative Voting 152
XVII
2.2.1. Economic Aspects and Comparison of Law 152
2.2.2. Considerations under Swiss Law 153
3. Proxy Voting and Proxy Fights 153
3.1. Economic Aspects 153
3.1.1. Proxy Rules in General 153
3.1.2. Collective Action Problems 154
3.1.2.1. Diversification of Shareholders Portfolios 154
3.1.2.2. The Wall Street Rule . 155
3.1.2.3. The Free Rider Problem 155
3.2. Comparison of Law 156
3.3. Considerations under Swiss Law 157
3.3.1. Invitation to Shareholders Meeting and Agenda 158
3.3.2. Voting by Proxy 160
3.3.3. Rules pertaining to the Meeting of the Shareholders 162
3.3.4. Communication among Shareholders 163
3.4. Conclusion 164
4. Interaction with Corporate Governance 165
§ 9 Control Monitoring the Board and the Management 167
1. An Introduction to Control, Disclosure and Transparency 167
2. Executive Compensation 168
2.1. Compensation Committees 168
2.1.1. Economic Aspects and Comparison of Law 168
2.1.2. Considerations under Swiss Law 168
2.2. Mandatory Executive Compensation Disclosure 170
2.2.1. Economic Aspects 170
2.2.2. Comparison of Law 170
2.2.3. Considerations under Swiss Law 171
3. Misappropriation of Corporate Opportunities 172
3.1. Economic Aspects and Comparison of Law 172
3.2. Considerations under Swiss Law 172
4. Insider Trading 173
4.1. Comparison of Law 173
4.1.1. Short Swing Profits under the U. S. Securities Laws 173
4.1.2. Insider Trading Regulation in the United States 175
XVIII . 4.1.2.1. The Controversy on Insider Trading Policy 176
4.1.2.2. Disclose or Abstain Rule 176
4.1.2.3. Misappropriation Theory 177
4.1.2.4. The Improper Disclosure Requirement for Tippees 178
4.1.2.5. The Safe Harbor for Planned Insider Transactions 178
4.2. Insider Trading Regulation in Switzerland 179
4.2.1. The Insider Trading Provision of Art. 161 of the Penal Code 179
4.2.2. Applicability of UK Insider Trading Rules to SMI Companies.... 180
4.2.3. The Price Manipulation Provisions in Switzerland 181
5. Duty to Disclose 182
5.1. Comparison of Law 182
5.2. The Ad hoc Publicity of the SWX Listing Rules 183
6. Interaction with Corporate Governance 184
§ 10 Dividend Policy and Share Repurchases 187
1. Free Cash Flow Theory of Capital Structure 187
1.1. The Control Hypothesis of Debt Creation 188
1.2. Empirical Data 189
2. The Dividend Puzzle :
Why Do Corporations Pay Out Dividends ? 189
2.1. The Miller/Modigliani Theorem 189
2.2. Agency Theories of Dividends 190
2.3. Empirical Data 191
3. Share Repurchases 192
3.1. Repurchase of Listed Stock 193
3.2. Repurchase of Non Listed Stock 195
4. Interaction with Corporate Governance 197
xix
PART IV A TRANSACTIONAL VIEW OF CORPORATE
GOVERNANCE
§ 11 Private Equity Transactions and Financing Decisions 201
1. Equity and Debt Financing 201
1.1. Agency Costs of Equity and Debt 201
1.2. Mezzanine Financing 201
1.2.1. Private Equity, Mezzanine and Senior Bank Financing 201
1.2.2. The Subordination of Mezzanine Financing 203
1.2.2.1. Contractual Subordination 203
1.2.2.2. Structural Subordination 204
1.2.3. Mechanics of Mezzanine Financing in Switzerland 205
1.2.3.1. Debt Instruments with Equity Kicker 206
1.2.3.2. Equity Instruments 207
1.2.4. Case Studies 208
1.2.4.1. Geberit 208
1.2.4.2. Tornos 209
2. Private Equity Transactions 209
2.1. Private Equity Transactions vs. other Investment Types 209
2.2. Costs and Benefits of Private Equity Transactions 211
2.2.1. The Private Equity Investor 211
2.2.2. The Portfolio Company and its Existing Shareholders 212
2.3. Types of Private Equity Transactions 212
2.3.1. Financing a Start up Business 213
2.3.2. Expansion Stage Investments 213
2.3.3. Turn Around Investments in Troubled Companies 214
2.3.4. Industry Consolidation 215
2.4. Statistics on U.S. Private Equity Transactions 215
2.5. Private Equity Transactions in Switzerland 216
2.5.1. SWX New Market 217
2.5.2. Listing Regulations for Investment Companies 217
2.5.3. Mechanics of a Private Equity Transaction 219
2.5.4. Exit Strategies 220
3. LBOs 221
3.1. Theoretical Foundation 221
XX 3.2. Structure of LBOs 222
3.3. Financing of LBOs 223
3.4. Geberit A Case Study 224
3.4.1. The Acquisition and the Mergers 224
3.4.2. Financing of the Acquisition 225
3.4.3. The Reorganization 225
3.4.4. Refinancing of Indebtedness 226
3.5. Economic Costs of LBOs 227
3.5.1. Bankruptcy Costs and Agency Costs 227
3.5.2. Shifting Wealth from Bondholders to Equityholders 227
3.6. Legal Problems with LBOs under Swiss Law 229
4. MBOs 231
4.1. Problems in Divisional Buyouts 231
4.2. Conflicts of Interest in MBOs 231
5. Going Public through IPOs 232
5.1. Economic Aspects of Going Public 233
5.1.1. Benefits of Going Public 233
5.1.2. Costs and Disadvantages of Going Public to
the Company and Insiders 234
5.2. Governance Problems in connection with IPOs 236
5.2.1 Offer Price of New Equity 236
5.2.2 Timing of Issuance of New Equity 237
5.2.3 Influencing the Composition of the Future Shareholder Base 238
5.2.4 Allocation of Shares to New Investors 238
5.2.5 Greenshoe Options 241
5.3. Duty to Establish Market Liquidity ? 241
5.3.1. Economic Aspects 242
5.3.2. Comparison of Law 242
5.3.3. Considerations under Swiss Law 243
5.3.4. Conclusion 244
5.4. Duty to Maintain Liquidity of an Existing Market ? 245
5.4.1. Comparison of Law 245
5.4.2. Considerations under Swiss Law 246
5.4.3. Conclusion 247
6. Interaction with Corporate Governance 248
— XXI
§ 12 Mergers Acquisitions 251
1. Economic Aspects of M A 252
1.1. Free Cash Flow Theory of Takeovers 252
1.2. Synergy 252
1.2.1. Operating Synergy 253
1.2.2. Financial Synergy 253
1.3. Diversification 254
1.4. Horizontal and Vertical Integration 255
1.4.1. Horizontal Integration 255
1.4.2. Vertical Integration 255
1.5. Hubris Hypothesis 256
1.6. Inefficient Management Hypothesis 256
1.7. Breach of Trust Hypothesis 256
1.8. Tax Motives 257
2. Structures and Mechanics of M A 257
2.1. Purchase type Transactions 258
2.1.1. Asset Purchase 258
2.1.1.1. Economic Aspects and Comparison of Law 258
2.1.1.2. Considerations under Swiss Law. 260
2.1.2. Stock Purchase 261
2.1.2.1. Economic Aspects and Comparison of Law 261
2.1.2.2. Considerations under Swiss Law. 262
2.1.3. Cash Merger 262
2.1.3.1. Economic Aspects and Comparison of Law 263
2.1.3.2. Considerations under Swiss Law 264
2.1.4. Triangular Mergers 265
2.1.4.1. Economic Aspects and Comparison of Law 265
2.1.4.2. Considerations under Swiss Law 26 7
2.2. Pooling type Transactions 267
2.2.1. Stock for Assets Transactions 268
2.2.1.1. Economic Aspects and Comparison of Law 268
2.2.1.2. Considerations under Swiss Law 269
2.2.2. Stock for stock Transaction (Share exchange) 270
2.2.2.1. Economic Aspects and Comparison of Law 270
2.2.2.2. Considerations under Swiss Law 272
2.2.3. Statutory Merger 273
2.2.3.1. Economic Aspects and Comparison of Law 273
XXII . —
2.2.3.2. Considerations under Swiss Law 274
2.2.3.3. Different Merger Consideration for Different Stockholder
Classes? 275
2.2.4. Short Form Merger 277
2.2.4.1. Economic Aspects and Comparison of Law 277
2.2.4.2. Considerations under Swiss Law 277
2.2.5. Triangular Mergers 277
2.2.5.1. Economic Aspects and Comparison of Law 277
2.2.5.2. Forward Triangular Mergers in particular 2 78
2.2.5.3. Reverse Triangular Mergers in particular 2 79
2.2.5.4. Considerations under Swiss Law 280
2.3. Major M A Transactions involving Swiss Corporations 281
2.3.1. Zurich Group and B.A.T. Industries 281
2.3.1.1. Restructuring of the Zurich Group 282
2.3.1.2. Restructuring of B.A.T. 282
2.3.1.3. Creation of a Double Holding Structure 283
2.3.1.4. Internal Governance 284
2.3.1.5. Take over Option 284
2.3.2. ABB Asea Brown Boveri AG 285
2.3.3. NovartisAG 287
2.3.4. UBSAG 287
2.3.5. Batigroup 288
2.3.6. The Mechanics of the Multiple Reverse Statutory Merger 288
2.3.6.1. Planning of the Transaction 288
2.3.6.2. Structure of the Transaction 289
2.3.6.3. Protection of the Transaction 290
2.3.6.4. Determination of the Exchange Ratio 292
2.3.7. The Helvetia / Patria Combination 292
2.3.7.1. Separation between Life Insurance and Non Life Insurance..293
2.3.7.2. Details of the Transaction 293
2.3.7.3. Payment to Shareholders and Insurance Policy Holders 294
2.4. Accounting Aspects of Mergers Acquisitions 295
2.4.1. Pooling of Interests and Purchase Accounting under U.S. GAAP 295
2.4.2. Requirements for Pooling of Interests Accounting
under U.S. GAAP 296
2.4.3. Pooling Requirements under IFRS/IAS and Swiss Accounting
Standards 296
2.4.4. Recent Developments in M A Accounting Rules 297
2.5. Valuation Aspects of Mergers Acquisitions 299
. . XXIII
3. The Duties of the Board in M A Transactions 301
3.1. Comparison to U.S. Law 301
3.1.1. The Board s General Duties in M A Transactions 301
3.1.2. The Board s Specific Duties in Takeover Contests 303
3.1.2.1. Reasonableness of Threat Perception and of
Defensive Measures 304
3.1.2.2. No Scheme to Disenfranchise Shareholders 305
3.1.3. The Board s Specific Duties in the Sale of Control 305
3.1.3.1. Duty to Obtain the Best Available Transaction for
Shareholders 306
3.1.3.2. Exemptions for Strategic Stock for Stock Mergers 307
3.1.3.3. Analysis of the Duty to Obtain the
Best Available Transaction 307
3.1.4. The Board s Specific Duties in Conflict Transactions 308
3.2. Considerations under Swiss Law 309
3.3. Conclusion 311
3.3.1. The Board s General Duties in M A Transactions 312
3.3.2. The Board s Specific Duties in Takeover Contests 313
3.3.3. The Board s Specific Duties in the Sale of Control 314
3.3.4. The Board s Specific Duties in Conflict Transactions 315
4. Freeze outs 316
4.1. Economic Aspects 316
4.1.1. Cash out Mergers 317
4.1.2. Short form Merger 317
4.1.3. Sale of Business 318
4.1.4. Reverse Stock Splits 319
4.2. Comparison of Law 320
4.2.1. U.S. Federal Law 320
4.2.2. Delaware law 320
4.3. Considerations under Swiss law 323
4.3.1. Statutory Freeze out Structures 323
4.3.2. Legal Standards in Freeze out Transactions 324
4.4. Conclusion 325
5. Sale of Control Blocks 325
5.1. Economic Aspects 325
5.2. Comparison of Law 326
5.3. Considerations under Swiss Law 327
XXIV 5.3.1. Control Premium 328
5.3.2. Duties of Majority Shareholder in Sale of Control 329
5.4. Conclusion 330
5.4.1. Control Premium 330
5.4.2. Duties of Majority Shareholder in Sale of Control 331
6. Interaction with Corporate Governance 331
§ 13 Takeover Defenses and Auctions 335
1. Takeover Defenses 335
1.1. Economic Analysis 335
1.1.1. No Protection Theory 335
1.1.2. Property Rule Protection Theory 336
1.1.3. Liability Rule Protection Theory 337
1.1.4. Overview of Takeover Defenses 337
1.2. Poison Pills 338
1.2.1. Economic Analysis of Poison Pills 338
1.2.1.1. Preferred Stock Plans 339
1.2.1.2. Flip Over Poison Pills 339
1.2.1.3. Flip In Poison Pills 340
1.2.1.4. Back End Plans 340
1.2.1.5. Voting Plans 341
1.2.1.6. Dead HandPoison Pills 341
1.2.1.7. No Hand Poison Pills 343
1.2.1.8. Poison Puts 344
1.2.2. Comparison of Law 344
1.2.3. Considerations under Swiss Law 345
1.2.4. Conclusion 347
1.3. Charter Amendments 348
1.3.1. Economic Aspects 348
1.3.2. Considerations under Swiss Law 348
1.4. Golden Parachutes 349
1.4.1. Economic Aspects and Comparison of Law 349
1.4.2. Considerations under Swiss Law 350
1.5. Buy back of own Shares and Greenmailing 351
1.5.1. Economic Aspects and Comparison of Law 351
1.5.2. Considerations under Swiss Law 351
1.6. Lock ups 352
1.6.1. Economic Aspects 352
. XXV
1.6.2. Comparison of Law 352
1.6.3. Considerations under Swiss Law 353
1.7. Termination Fees or Break up Fees 353
1.7.1. Economic Aspects 353
1.7.2. Comparison of Law 354
1.7.3. Considerations under Swiss Law 354
1.8. The Just Say No Defense 355
1.8.1. Comparison of Law 355
1.8.2. Considerations under Swiss Law 355
1.9. Conclusion 356
2. Competing Takeover Bids and Auctions 357
2.1. Economic Aspects 357
2.1.1. Economic Analysis of Competing Takeover Bids 357
2.1.2. Economic Aspects of Auctions 358
2.3. Contractual Obligations of Seller and Bidders in an Auction 3 60
2.3.1. Obligations of the Seller 361
2.3.2. Obligations of the Bidder 361
2.4. Duties of the Target Board in an Auction 362
2.4.1. Comparison of Law 362
2.4.1.1. No Standard Procedures Required by Law 362
2.4.1.2. A Safe Harbor : The FUR Nabisco Auction 363
2.4.1.3. Finding the Right Time to End an Auction 364
2.4.2. Considerations under Swiss Law 365
2.4.3. Conclusion 367
3. Interaction with Corporate Governance 367
§ 14 Restructuring, Tracking Stock and Recapitalizations 369
1. Restructuring 369
1.1. Economic Aspects and Comparison of Law 369
1.1.1. Divestiture 370
1.1.2. Equity Carve out 370
1.1.2.1. Mechanics of Carve Outs 371
1.1.2.2. Combined Carve Out / Spin off Transactions 372
1.1.2.3. Dual Class Carve Outs 372
1.1.2.4. Reverse Carve Outs 373
1.1.2.5. Joint Venture Carve Outs with LLCStructure 373
1.1.2.6. Stock Price Reaction 374
XXVI 1.1.3. Spin off (Symmetrische Abspaltung) 374
1.1.4. Split off (Asymmetrische Abspaltung) 378
1.1.5. Split up (Aufspaltung) 380
1.2. Considerations under Swiss Law 380
1.2.1. Protection of Shareholders 381
1.2.1.1. Comparison of Law 382
1.2.1.2. The Provisions of the new Swiss Merger Act 383
1.2.2. Protection of Creditors 383
1.2.2.1. Comparison of Law 383
1.2.2.2. The Provisions of the new Swiss Merger Act 384
2. Tracking Stock 384
2.1. Economic Aspects 385
2.1.1. Advantages of Tracking Stock 386
2.1.2. Disadvantages of Tracking Stock 387
2.2. Considerations under Swiss Law 388
2.2.1. Mechanics of Tracking Stock 388
2.2.2. Dividend Access Shares and Stapled Stocks 389
2.3. Conclusion 390
3. Recapitalizations 390
3.1. Economic Aspects 391
3.1.1. Structuring Recapitalizations 391
3.1.1.1. Merger type Recapitalization 391
3.1.1.2. Reclassification of Shares 392
3.1.1.3. Exchange Offer Recapitalization 392
3.1.2. Reasons for Recapitalizations 393
3.1.2.1. Economic Incentives 393
3.1.2.2. Takeover Defense 393
3.1.2.3. Recap Accounting under U.S. GAAP. 393
3.2. Comparison of Law 395
3.2.1. Recapitalizations Triggering the Duty to Maximize Sale Value? . 395
3.2.2. Recapitalizations and Preferred Shareholders 396
3.3. Considerations under Swiss Law 398
3.3.1. Recapitalizations Triggering a Duty to Maximize Sale Value? 398
3.3.2. Recapitalizations and Preferred Shareholders 399
4. Interaction with Corporate Governance 399
XXVII
PARTV CONCLUSION
§15 Summary Conclusions on Corporate Governance and
Capital Market Transactions in Switzerland 403
1. Theoretical Foundation of the
Corporate Governance Environment (§ 1 3) 403
2. The Policy Goal of Corporate Governance 403
3. Implementation of the Policy Goals 405
3.1. Structure 405
3.1.1. Overview 405
3.1.2. The Role of Shareholders (§ 4) 406
3.1.3. The Role of Directors (§ 5) 406
3.1.4. The Role of Management (§ 6) 407
3.1.5. The Role of Creditors and Other Stakeholders (§ 7) 408
3.2. Process 408
3.2.1. Voting (§8) 408
3.2.2. Control (§9) 409
3.2.3. Dividend Policy and Share Repurchases (§ 10) 410
3.3. Transactions 410
3.3.1. Overview 411
3.3.2. Private Equity Transactions and Financing Decisions (§ 11) 411
3.3.3. Mergers Acquisitions (§ 12) 413
3.3.4. Takeover Defenses and Auctions (§ 13) 415
3.3.5. Restructuring, Tracking Stock and Recapitalizations (§ 14) 415
4. Conclusion 416
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XI
TABLE OF CONTENTS
PART I THE BASIC CONCEPT OF CORPORATE GOVERNANCE
§ 1 An Introduction to Corporate Governance 3
1. Separation of Ownership and Control 5
1.1. The Classical Approach: "Management Control" 5
1.2. Combinations of Ownership and Control Structures 6
1.3. The European Approach: "Blockholder Control" 8
1.4. Separation of Ownership and Control in Europe 8
2. Different Systems of Capital Markets and Ownership Structure. 9
3. The Corporation and its Purpose 13
3.1. The Development of Corporations 14
3.2. Characteristics of a Corporation 16
3.2.1. Centralized Management 16
3.2.2. Limited Liability 17
3.2.2.1. Limited Liability Reduces Monitoring Costs 17
3.2.2.2. Limited Liability Reduces Transaction Costs 18
3.2.2.3. Downsides of Limited Liability 18
3.3. Purpose and Objective of a Corporation 18
§ 2 Economic Aspects of Corporate Governance 23
1. Theoretical Foundations 23
1.1. Theory of the Firm: The Separation of Ownership and Control 23
1.1.1. Neoclassical Economics ("Chicago School") 23
1.1.2. Managerialists 25
1.1.3. Transaction Cost School 25
1.2. Theory of Capital Markets 27
2. Systematical Approach to Corporate Governance 28
2.1. Internal and External Governance Factors 29
XII 2.2. Sources of Corporate Governance: Legal Rules, Economic Incentives
and Reputation 29
2.3. Structural, Process Oriented, and Transactional View 30
3. Development of Corporate Governance 30
3.1. Overview ™
3.2. The Rise of Institutional Investors and Governance Activism 31
3.2.1. Governance Activism 3 j
3.2.2. CalPERS An Example of Shareholder Activism."."'.'.33
3.3. Globalization of Corporate Governance 33
3.3.1. Harmonization of Corporate Governance Standards 33
3.3.2. Economic Reasons for Investments in Foreign Corporations.!.36
§3 The Sources of Corporate Governance Rules 39
1. The Impact of Corporation Laws 39
1.1. The "Race for the Bottom" Debate 39
1.1.1 Theoretical Foundations 40
1.1.2. The Success of the Delaware General' Corporati™ Law! ZZZZ.41
1.2. Enabling or Mandatory Rules? 1.2.1. The Contractarian Theory ZZ. 43
1.2.2. Arguments for and Counter arguments against'a Mandatory Structure 1.2.3. The Impact of Mid stream Changes on Enabling or Mandatory Rules B
1.2.4. The Impact of Courts on Enabling ^dMandatoty 'r^sZZZZ.4S
2. The Impact of Financial Markets Regulation 48
2.1. Investor Protection versus Shareholder Protection 48
2.2. The OECD Principles of Corporate Governance ~. 48
2.3. U.S. Legislation 2.4. The Legal Framework in the European Union 51
2.5. The Legal Framework in Switzerland. sl
2.6. The Rules of SROs 2.6.1. The New York Stock Exchange o
2.6.2. The NASDAQ 52
2.6.3. The SWX Swiss Exchan ZZZZZZ. 53
2.7. Harmonization of Securities Regulation'in a'Global MarketTHIIsS
xm
3. Corporate Governance Guidelines and Principles 55
3.1. Guidelines of Public Companies 55
3.2. CalPERS Proposal for "Core Principles and Guidelines" 56
3.3. Statement of the Business Roundtable 56
3.4. Corporate Governance Guidelines and Codes of Best Practices 57
3.4.1. The Cadbury Report 58
3.4.2. The Hampel Report 58
3.4.3. The Combined Code 59
3.4.4. The German KonTraG 59
3.4.5. The U.S. Blue Ribbon Report 59
3.4.6. The Turnbull Report 60
3.4.7. The 2003 Combined Code on Corporate Governance 60
3.5. The Swiss Code of Best Practice 60
PART II A STRUCTURAL VIEW OF CORPORATE GOVERNANCE
§ 4 The Role of Shareholders 65
1. Elementary Rights of Shareholders under the OECD Principles. 65
1.1. Voting Rights 65
1.2. Equal Treatment of Shareholders 66
1.3. Considerations under Swiss Law 66
2. Types of Shareholders 66
2.1. Institutional Investors 67
2.1.1. Economic Aspects 67
2.1.1.1. Benefits of Having Institutional Investors 67
2.1.1.2. Costs of Having Institutional Investors 67
2.1.1.3. Controlling Blockholders 68
2.1.2. Comparison of Law 69
2.1.2.1. The Role of Institutional Investors in the U.S. and Worldwide.69
2.1.2.2. The Shareholders' Advisory Committee 69
2.1.3. Considerations under Swiss Law 70
3. Shareholder Derivative Suits 71
3.1. Economic Aspects 72
3.1.1. Costs of Derivative Suits 72
XIV 3.1.2. Benefits of Derivative Suits 73
3.2. Comparison of Law 73
3.2.1. U.S. Shareholder Litigation in Theory 73
3.2.2. U.S. Shareholder Litigation in Practice 74
3.2.3. Possibilities for Reform 76
3.3. Considerations under Swiss Law 76
3.4. Conclusion 78
§ 5 The Role of Directors 81
1. Responsibilities and Duties of the Board of Directors 82
1.1. Responsibilities and Duties in General 82
1. 2. Comparison of Law 82
1. 3. Considerations under Swiss Law 83
1.3.1. Internal Structure of a Corporation 83
1.3.2. Responsibilities of the Board of Directors 84
1.3.3. Duties of the Board 85
1.3.4. Rights of Board Members 86
1.3.5. Organization of the Board 87
1.3.6. Relationship towards Shareholders and Auditors 88
1.3.7. Due Consideration of Transactions 88
2. The Role of Independent Outside Directors 90
2.1. Empirical Data on Outside Directors in Swiss Corporations 91
2.2. Separation of Chairman and CEO 92
3. Structuring the Board through Committees 96
3.1. Audit Committee 96
3.2. Nominating Committee 97
3.3. Compensation Committee 98
3.4. Ad hoc Committees and Special Purpose Committees 99
3.5. Most common Board Committees of Swiss Corporations 99
4. Board Composition and Compensation 101
4.1. Market for Corporate Control 101
4.2. Composition of Swiss Boards of Directors 102
4.3. Board Compensation in Swiss Corporations 105
4.4. Number of Board Meetings per Year 109
XV
5. Advisory Boards as an Additional Governance Tool ? Ill
5.1. Types of Advisory Boards Ill
5.2. The Advisory Boards of Credit Suisse Group 111
6. Conclusion Ill
§6 The Role of Management 115
1. Executive Compensation 115
11. Compensation Schemes 115
1.2. The Use of Stock Options in the United States 116
1.3. U.S. style Executive Compensation for European Corporations? 118
1.4. Executive Compensation in Switzerland 119
1.4.1. Legal Framework for Equity Participation
Schemes in Switzerland 119
1 4.2. Empirical Data on Executive Compensation in Switzerland 120
2. Board Membership 121
2.1. Economic Aspects 122
2.2. Considerations and Conclusion 122
3. Disclosure of Information on Management 123
§ 7 The Role of Creditors and Other Stakeholders 125
1. Creditors, or the Concept of "Bondholder Value" 125
1 1. Agency Costs of Equity 125
1 2. Agency Costs of Debt 125
1 3. Concept of Bondholder Value 126
1 4. Protection of Creditors 127
2. Other Stakeholders 128
2.1. Economic Aspects 128
2.2. Considerations under Swiss Law 129
2.3. Conclusion 130
XVI PART III A PROCESS ORIENTED VIEW
OF CORPORATE GOVERNANCE
§ 8 The Decision making Process 137
1. One Share One Vote Principle 137
1.1. Dual Class Capitalization with Different Voting Power 138
1.1.1. Economic Aspects 139
1.1.2. Comparison of Law 140
1.1.3. Considerations under Swiss Law 141
1.2. Company's Stock held by its Subsidiary 141
1.2.1. Economic Aspects 141
1.2.2. Comparison of Law 141
1.2.3. Considerations under Swiss Law 142
1.3. Pyramidal Shareholdings 143
1.4. Crossholdings 145
1.4.1. Economic Aspects and Comparison of Law 145
1.4.2. Considerations under Swiss Law 147
1.5. "Loops" or Circular Ownership 148
1.5.1. Economic Aspects 148
1.5.2. Comparison of Law 148
1.5.3. Considerations under Swiss Law 148
1.6. Company's Stock held by its subsidiary Fund Manager Entity 149
1.6.1. Economic Aspects 149
1.6.2. Considerations under Swiss Law 149
1.7. Futures Contracts 150
1.7.1. Economic Aspects 150
1.7.2. Considerations under Swiss Law 150
1.8. Securities Lending 150
1.8.1. Economic Aspects 150
1.8.2. Considerations under Swiss Law 151
2. Special Voting Mechanics 151
2.1. Class Voting 151
2.1.1. Economic Aspects and Comparison of Law 151
2.1.2. Considerations under Swiss Law 151
2.2. Cumulative Voting 152
XVII
2.2.1. Economic Aspects and Comparison of Law 152
2.2.2. Considerations under Swiss Law 153
3. Proxy Voting and Proxy Fights 153
3.1. Economic Aspects 153
3.1.1. Proxy Rules in General 153
3.1.2. Collective Action Problems 154
3.1.2.1. Diversification of Shareholders' Portfolios 154
3.1.2.2. The "Wall Street Rule". 155
3.1.2.3. The "Free Rider"Problem 155
3.2. Comparison of Law 156
3.3. Considerations under Swiss Law 157
3.3.1. Invitation to Shareholders'Meeting and Agenda 158
3.3.2. Voting by Proxy 160
3.3.3. Rules pertaining to the Meeting of the Shareholders 162
3.3.4. Communication among Shareholders 163
3.4. Conclusion 164
4. Interaction with Corporate Governance 165
§ 9 Control Monitoring the Board and the Management 167
1. An Introduction to Control, Disclosure and Transparency 167
2. Executive Compensation 168
2.1. Compensation Committees 168
2.1.1. Economic Aspects and Comparison of Law 168
2.1.2. Considerations under Swiss Law 168
2.2. Mandatory Executive Compensation Disclosure 170
2.2.1. Economic Aspects 170
2.2.2. Comparison of Law 170
2.2.3. Considerations under Swiss Law 171
3. Misappropriation of Corporate Opportunities 172
3.1. Economic Aspects and Comparison of Law 172
3.2. Considerations under Swiss Law 172
4. Insider Trading 173
4.1. Comparison of Law 173
4.1.1. Short Swing Profits under the U. S. Securities Laws 173
4.1.2. Insider Trading Regulation in the United States 175
XVIII . 4.1.2.1. The Controversy on Insider Trading Policy 176
4.1.2.2. "Disclose or Abstain" Rule 176
4.1.2.3. Misappropriation Theory 177
4.1.2.4. The "Improper Disclosure" Requirement for Tippees 178
4.1.2.5. The Safe Harbor for Planned Insider Transactions 178
4.2. Insider Trading Regulation in Switzerland 179
4.2.1. The Insider Trading Provision of Art. 161 of the Penal Code 179
4.2.2. Applicability of UK Insider Trading Rules to SMI Companies. 180
4.2.3. The Price Manipulation Provisions in Switzerland 181
5. Duty to Disclose 182
5.1. Comparison of Law 182
5.2. The Ad hoc Publicity of the SWX Listing Rules 183
6. Interaction with Corporate Governance 184
§ 10 Dividend Policy and Share Repurchases 187
1. Free Cash Flow Theory of Capital Structure 187
1.1. The "Control Hypothesis" of Debt Creation 188
1.2. Empirical Data 189
2. The "Dividend Puzzle":
Why Do Corporations Pay Out Dividends ? 189
2.1. The Miller/Modigliani Theorem 189
2.2. Agency Theories of Dividends 190
2.3. Empirical Data 191
3. Share Repurchases 192
3.1. Repurchase of Listed Stock 193
3.2. Repurchase of Non Listed Stock 195
4. Interaction with Corporate Governance 197
xix
PART IV A TRANSACTIONAL VIEW OF CORPORATE
GOVERNANCE
§ 11 Private Equity Transactions and Financing Decisions 201
1. Equity and Debt Financing 201
1.1. Agency Costs of Equity and Debt 201
1.2. Mezzanine Financing 201
1.2.1. Private Equity, Mezzanine and Senior Bank Financing 201
1.2.2. The Subordination of Mezzanine Financing 203
1.2.2.1. Contractual Subordination 203
1.2.2.2. Structural Subordination 204
1.2.3. Mechanics of Mezzanine Financing in Switzerland 205
1.2.3.1. Debt Instruments with Equity Kicker 206
1.2.3.2. Equity Instruments 207
1.2.4. Case Studies 208
1.2.4.1. Geberit 208
1.2.4.2. Tornos 209
2. Private Equity Transactions 209
2.1. Private Equity Transactions vs. other Investment Types 209
2.2. Costs and Benefits of Private Equity Transactions 211
2.2.1. The Private Equity Investor 211
2.2.2. The Portfolio Company and its Existing Shareholders 212
2.3. Types of Private Equity Transactions 212
2.3.1. Financing a Start up Business 213
2.3.2. Expansion Stage Investments 213
2.3.3. Turn Around Investments in Troubled Companies 214
2.3.4. Industry Consolidation 215
2.4. Statistics on U.S. Private Equity Transactions 215
2.5. Private Equity Transactions in Switzerland 216
2.5.1. SWX New Market 217
2.5.2. Listing Regulations for Investment Companies 217
2.5.3. Mechanics of a Private Equity Transaction 219
2.5.4. Exit Strategies 220
3. LBOs 221
3.1. Theoretical Foundation 221
XX 3.2. Structure of LBOs 222
3.3. Financing of LBOs 223
3.4. Geberit A Case Study 224
3.4.1. The Acquisition and the Mergers 224
3.4.2. Financing of the Acquisition 225
3.4.3. The Reorganization 225
3.4.4. Refinancing of Indebtedness 226
3.5. Economic Costs of LBOs 227
3.5.1. Bankruptcy Costs and Agency Costs 227
3.5.2. Shifting Wealth from Bondholders to Equityholders 227
3.6. Legal Problems with LBOs under Swiss Law 229
4. MBOs 231
4.1. Problems in Divisional Buyouts 231
4.2. Conflicts of Interest in MBOs 231
5. Going Public through IPOs 232
5.1. Economic Aspects of Going Public 233
5.1.1. Benefits of Going Public 233
5.1.2. Costs and Disadvantages of Going Public to
the Company and Insiders 234
5.2. Governance Problems in connection with IPOs 236
5.2.1 Offer Price of New Equity 236
5.2.2 Timing of Issuance of New Equity 237
5.2.3 Influencing the Composition of the Future Shareholder Base 238
5.2.4 Allocation of Shares to New Investors 238
5.2.5 Greenshoe Options 241
5.3. Duty to Establish Market Liquidity ? 241
5.3.1. Economic Aspects 242
5.3.2. Comparison of Law 242
5.3.3. Considerations under Swiss Law 243
5.3.4. Conclusion 244
5.4. Duty to Maintain Liquidity of an Existing Market ? 245
5.4.1. Comparison of Law 245
5.4.2. Considerations under Swiss Law 246
5.4.3. Conclusion 247
6. Interaction with Corporate Governance 248
— XXI
§ 12 Mergers Acquisitions 251
1. Economic Aspects of M A 252
1.1. Free Cash Flow Theory of Takeovers 252
1.2. Synergy 252
1.2.1. Operating Synergy 253
1.2.2. Financial Synergy 253
1.3. Diversification 254
1.4. Horizontal and Vertical Integration 255
1.4.1. Horizontal Integration 255
1.4.2. Vertical Integration 255
1.5. Hubris Hypothesis 256
1.6. Inefficient Management Hypothesis 256
1.7. Breach of Trust Hypothesis 256
1.8. Tax Motives 257
2. Structures and Mechanics of M A 257
2.1. Purchase type Transactions 258
2.1.1. Asset Purchase 258
2.1.1.1. Economic Aspects and Comparison of Law 258
2.1.1.2. Considerations under Swiss Law. 260
2.1.2. Stock Purchase 261
2.1.2.1. Economic Aspects and Comparison of Law 261
2.1.2.2. Considerations under Swiss Law. 262
2.1.3. Cash Merger 262
2.1.3.1. Economic Aspects and Comparison of Law 263
2.1.3.2. Considerations under Swiss Law 264
2.1.4. Triangular Mergers 265
2.1.4.1. Economic Aspects and Comparison of Law 265
2.1.4.2. Considerations under Swiss Law 26 7
2.2. Pooling type Transactions 267
2.2.1. Stock for Assets Transactions 268
2.2.1.1. Economic Aspects and Comparison of Law 268
2.2.1.2. Considerations under Swiss Law 269
2.2.2. Stock for stock Transaction (Share exchange) 270
2.2.2.1. Economic Aspects and Comparison of Law 270
2.2.2.2. Considerations under Swiss Law 272
2.2.3. Statutory Merger 273
2.2.3.1. Economic Aspects and Comparison of Law 273
XXII . —
2.2.3.2. Considerations under Swiss Law 274
2.2.3.3. Different Merger Consideration for Different Stockholder
Classes? 275
2.2.4. Short Form Merger 277
2.2.4.1. Economic Aspects and Comparison of Law 277
2.2.4.2. Considerations under Swiss Law 277
2.2.5. Triangular Mergers 277
2.2.5.1. Economic Aspects and Comparison of Law 277
2.2.5.2. Forward Triangular Mergers in particular 2 78
2.2.5.3. Reverse Triangular Mergers in particular 2 79
2.2.5.4. Considerations under Swiss Law 280
2.3. Major M A Transactions involving Swiss Corporations 281
2.3.1. Zurich Group and B.A.T. Industries 281
2.3.1.1. Restructuring of the Zurich Group 282
2.3.1.2. Restructuring of B.A.T. 282
2.3.1.3. Creation of a Double Holding Structure 283
2.3.1.4. Internal Governance 284
2.3.1.5. Take over Option 284
2.3.2. ABB Asea Brown Boveri AG 285
2.3.3. NovartisAG 287
2.3.4. UBSAG 287
2.3.5. Batigroup 288
2.3.6. The Mechanics of the Multiple Reverse Statutory Merger 288
2.3.6.1. Planning of the Transaction 288
2.3.6.2. Structure of the Transaction 289
2.3.6.3. Protection of the Transaction 290
2.3.6.4. Determination of the Exchange Ratio 292
2.3.7. The Helvetia / Patria Combination 292
2.3.7.1. Separation between Life Insurance and Non Life Insurance.293
2.3.7.2. Details of the Transaction 293
2.3.7.3. Payment to Shareholders and Insurance Policy Holders 294
2.4. Accounting Aspects of Mergers Acquisitions 295
2.4.1. Pooling of Interests and Purchase Accounting under U.S. GAAP 295
2.4.2. Requirements for Pooling of Interests Accounting
under U.S. GAAP 296
2.4.3. Pooling Requirements under IFRS/IAS and Swiss Accounting
Standards 296
2.4.4. Recent Developments in M A Accounting Rules 297
2.5. Valuation Aspects of Mergers Acquisitions 299
. . XXIII
3. The Duties of the Board in M A Transactions 301
3.1. Comparison to U.S. Law 301
3.1.1. The Board's General Duties in M A Transactions 301
3.1.2. The Board's Specific Duties in Takeover Contests 303
3.1.2.1. Reasonableness of Threat Perception and of
Defensive Measures 304
3.1.2.2. No Scheme to Disenfranchise Shareholders 305
3.1.3. The Board's Specific Duties in the Sale of Control 305
3.1.3.1. Duty to Obtain the Best Available Transaction for
Shareholders 306
3.1.3.2. Exemptions for Strategic Stock for Stock Mergers 307
3.1.3.3. Analysis of the Duty to Obtain the
Best Available Transaction 307
3.1.4. The Board's Specific Duties in Conflict Transactions 308
3.2. Considerations under Swiss Law 309
3.3. Conclusion 311
3.3.1. The Board's General Duties in M A Transactions 312
3.3.2. The Board's Specific Duties in Takeover Contests 313
3.3.3. The Board's Specific Duties in the Sale of Control 314
3.3.4. The Board's Specific Duties in Conflict Transactions 315
4. Freeze outs 316
4.1. Economic Aspects 316
4.1.1. Cash out Mergers 317
4.1.2. Short form Merger 317
4.1.3. Sale of Business 318
4.1.4. Reverse Stock Splits 319
4.2. Comparison of Law 320
4.2.1. U.S. Federal Law 320
4.2.2. Delaware law 320
4.3. Considerations under Swiss law 323
4.3.1. Statutory Freeze out Structures 323
4.3.2. Legal Standards in Freeze out Transactions 324
4.4. Conclusion 325
5. Sale of Control Blocks 325
5.1. Economic Aspects 325
5.2. Comparison of Law 326
5.3. Considerations under Swiss Law 327
XXIV 5.3.1. Control Premium 328
5.3.2. Duties of Majority Shareholder in Sale of Control 329
5.4. Conclusion 330
5.4.1. Control Premium 330
5.4.2. Duties of Majority Shareholder in Sale of Control 331
6. Interaction with Corporate Governance 331
§ 13 Takeover Defenses and Auctions 335
1. Takeover Defenses 335
1.1. Economic Analysis 335
1.1.1. No Protection Theory 335
1.1.2. Property Rule Protection Theory 336
1.1.3. Liability Rule Protection Theory 337
1.1.4. Overview of Takeover Defenses 337
1.2. Poison Pills 338
1.2.1. Economic Analysis of Poison Pills 338
1.2.1.1. Preferred Stock Plans 339
1.2.1.2. Flip Over Poison Pills 339
1.2.1.3. Flip In Poison Pills 340
1.2.1.4. Back End Plans 340
1.2.1.5. Voting Plans 341
1.2.1.6. Dead HandPoison Pills 341
1.2.1.7. No Hand Poison Pills 343
1.2.1.8. Poison Puts 344
1.2.2. Comparison of Law 344
1.2.3. Considerations under Swiss Law 345
1.2.4. Conclusion 347
1.3. Charter Amendments 348
1.3.1. Economic Aspects 348
1.3.2. Considerations under Swiss Law 348
1.4. Golden Parachutes 349
1.4.1. Economic Aspects and Comparison of Law 349
1.4.2. Considerations under Swiss Law 350
1.5. Buy back of own Shares and Greenmailing 351
1.5.1. Economic Aspects and Comparison of Law 351
1.5.2. Considerations under Swiss Law 351
1.6. Lock ups 352
1.6.1. Economic Aspects 352
. XXV
1.6.2. Comparison of Law 352
1.6.3. Considerations under Swiss Law 353
1.7. Termination Fees or "Break up" Fees 353
1.7.1. Economic Aspects 353
1.7.2. Comparison of Law 354
1.7.3. Considerations under Swiss Law 354
1.8. The "Just Say No" Defense 355
1.8.1. Comparison of Law 355
1.8.2. Considerations under Swiss Law 355
1.9. Conclusion 356
2. Competing Takeover Bids and Auctions 357
2.1. Economic Aspects 357
2.1.1. Economic Analysis of Competing Takeover Bids 357
2.1.2. Economic Aspects of Auctions 358
2.3. Contractual Obligations of Seller and Bidders in an Auction 3 60
2.3.1. Obligations of the Seller 361
2.3.2. Obligations of the Bidder 361
2.4. Duties of the Target Board in an Auction 362
2.4.1. Comparison of Law 362
2.4.1.1. No Standard Procedures Required by Law 362
2.4.1.2. A "Safe Harbor": The FUR Nabisco Auction 363
2.4.1.3. Finding the Right Time to End an Auction 364
2.4.2. Considerations under Swiss Law 365
2.4.3. Conclusion 367
3. Interaction with Corporate Governance 367
§ 14 Restructuring, Tracking Stock and Recapitalizations 369
1. Restructuring 369
1.1. Economic Aspects and Comparison of Law 369
1.1.1. Divestiture 370
1.1.2. Equity Carve out 370
1.1.2.1. Mechanics of Carve Outs 371
1.1.2.2. Combined Carve Out / Spin off Transactions 372
1.1.2.3. Dual Class Carve Outs 372
1.1.2.4. Reverse Carve Outs 373
1.1.2.5. Joint Venture Carve Outs with LLCStructure 373
1.1.2.6. Stock Price Reaction 374
XXVI 1.1.3. Spin off (Symmetrische Abspaltung) 374
1.1.4. Split off (Asymmetrische Abspaltung) 378
1.1.5. Split up (Aufspaltung) 380
1.2. Considerations under Swiss Law 380
1.2.1. Protection of Shareholders 381
1.2.1.1. Comparison of Law 382
1.2.1.2. The Provisions of the new Swiss Merger Act 383
1.2.2. Protection of Creditors 383
1.2.2.1. Comparison of Law 383
1.2.2.2. The Provisions of the new Swiss Merger Act 384
2. Tracking Stock 384
2.1. Economic Aspects 385
2.1.1. Advantages of Tracking Stock 386
2.1.2. Disadvantages of Tracking Stock 387
2.2. Considerations under Swiss Law 388
2.2.1. Mechanics of Tracking Stock 388
2.2.2. Dividend Access Shares and Stapled Stocks 389
2.3. Conclusion 390
3. Recapitalizations 390
3.1. Economic Aspects 391
3.1.1. Structuring Recapitalizations 391
3.1.1.1. Merger type Recapitalization 391
3.1.1.2. Reclassification of Shares 392
3.1.1.3. Exchange Offer Recapitalization 392
3.1.2. Reasons for Recapitalizations 393
3.1.2.1. Economic Incentives 393
3.1.2.2. Takeover Defense 393
3.1.2.3. Recap Accounting under U.S. GAAP. 393
3.2. Comparison of Law 395
3.2.1. Recapitalizations Triggering the Duty to Maximize Sale Value? . 395
3.2.2. Recapitalizations and Preferred Shareholders 396
3.3. Considerations under Swiss Law 398
3.3.1. Recapitalizations Triggering a Duty to Maximize Sale Value? 398
3.3.2. Recapitalizations and Preferred Shareholders 399
4. Interaction with Corporate Governance 399
XXVII
PARTV CONCLUSION
§15 Summary Conclusions on Corporate Governance and
Capital Market Transactions in Switzerland 403
1. Theoretical Foundation of the
Corporate Governance Environment (§ 1 3) 403
2. The Policy Goal of Corporate Governance 403
3. Implementation of the Policy Goals 405
3.1. Structure 405
3.1.1. Overview 405
3.1.2. The Role of Shareholders (§ 4) 406
3.1.3. The Role of Directors (§ 5) 406
3.1.4. The Role of Management (§ 6) 407
3.1.5. The Role of Creditors and Other Stakeholders (§ 7) 408
3.2. Process 408
3.2.1. Voting (§8) 408
3.2.2. Control (§9) 409
3.2.3. Dividend Policy and Share Repurchases (§ 10) 410
3.3. Transactions 410
3.3.1. Overview 411
3.3.2. Private Equity Transactions and Financing Decisions (§ 11) 411
3.3.3. Mergers Acquisitions (§ 12) 413
3.3.4. Takeover Defenses and Auctions (§ 13) 415
3.3.5. Restructuring, Tracking Stock and Recapitalizations (§ 14) 415
4. Conclusion 416 |
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| spelling | Bohrer, Andreas Verfasser aut Corporate governance and capital market transactions in Switzerland the mechanics of mergers, acquisitions, buyouts, private equity transactions and restructuring and their impact on the governance of corporations under Swiss law Andreas Bohrer Zürich [u.a.] Schulthess 2005 LXXVI, 417 S. graph. Darst. txt rdacontent n rdamedia nc rdacarrier Zugl.: Zürich, Univ., Habil.-Schr. (DE-588)4113937-9 Hochschulschrift gnd-content Zürich uvp HBZ Datenaustausch application/pdf http://bvbr.bib-bvb.de:8991/F?func=service&doc_library=BVB01&local_base=BVB01&doc_number=014680564&sequence=000002&line_number=0001&func_code=DB_RECORDS&service_type=MEDIA Inhaltsverzeichnis |
| spellingShingle | Bohrer, Andreas Corporate governance and capital market transactions in Switzerland the mechanics of mergers, acquisitions, buyouts, private equity transactions and restructuring and their impact on the governance of corporations under Swiss law |
| subject_GND | (DE-588)4113937-9 |
| title | Corporate governance and capital market transactions in Switzerland the mechanics of mergers, acquisitions, buyouts, private equity transactions and restructuring and their impact on the governance of corporations under Swiss law |
| title_auth | Corporate governance and capital market transactions in Switzerland the mechanics of mergers, acquisitions, buyouts, private equity transactions and restructuring and their impact on the governance of corporations under Swiss law |
| title_exact_search | Corporate governance and capital market transactions in Switzerland the mechanics of mergers, acquisitions, buyouts, private equity transactions and restructuring and their impact on the governance of corporations under Swiss law |
| title_exact_search_txtP | Corporate governance and capital market transactions in Switzerland the mechanics of mergers, acquisitions, buyouts, private equity transactions and restructuring and their impact on the governance of corporations under Swiss law |
| title_full | Corporate governance and capital market transactions in Switzerland the mechanics of mergers, acquisitions, buyouts, private equity transactions and restructuring and their impact on the governance of corporations under Swiss law Andreas Bohrer |
| title_fullStr | Corporate governance and capital market transactions in Switzerland the mechanics of mergers, acquisitions, buyouts, private equity transactions and restructuring and their impact on the governance of corporations under Swiss law Andreas Bohrer |
| title_full_unstemmed | Corporate governance and capital market transactions in Switzerland the mechanics of mergers, acquisitions, buyouts, private equity transactions and restructuring and their impact on the governance of corporations under Swiss law Andreas Bohrer |
| title_short | Corporate governance and capital market transactions in Switzerland |
| title_sort | corporate governance and capital market transactions in switzerland the mechanics of mergers acquisitions buyouts private equity transactions and restructuring and their impact on the governance of corporations under swiss law |
| title_sub | the mechanics of mergers, acquisitions, buyouts, private equity transactions and restructuring and their impact on the governance of corporations under Swiss law |
| topic_facet | Hochschulschrift |
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