Legal Aspects of Corporate Finance

Term: 
Winter
Credits: 
1.0
Course Description: 

The recent global financial crisis has clearly highlighted the fundamental role financing plays in the life of businesses in developed and emerging economies alike. It is also commonly known that the leading economies of our times are the systems with the largest corporate sectors and hence it is justified to conclude that a strong corporate sector is the token of the strength of the economy. Yet strong corporate sectors cannot develop, or even exist, without readily exploitable avenues to capital and a legal environment that is friendly to the needs and expectations of both, the providers and users of capital.

The course will focus on the many roles law is entrusted with in respect of these aims and goals from a comparative perspective starting from the repercussions of the differences in the legal capital rules (common law v. civilian systems), payment of dividends, stock redemptions, basic features of and key concerns connected to common versus preferred shares as well as convertible bonds, hedging risks (derivatives), shareholder agreements, as well as insight into the law of mergers & acquisitions and takeovers.

Albeit the problems faced by lawyers in developed systems may seem to be different than the ones troubling their colleagues from emerging markets, the number of common problems has drastically increased in our globalized world. While developed countries are doing everything to prevent the collapse, or the emergence of anything pathological in the life of corporations or capital markets, emerging markets are still in the process of forging the legal tools that could jump-start their local corporate sectors, what is a challenging task given that in the latter the exact nature of more complex financing methods (e.g., preferential shares or convertible bonds) is still unclear and untested in courts. The resulting legal vacuum is a serious problem not just because unpredictability hinders development but increasingly because the days when one could have safely ignored these types of problems are over. Suffice to mention the peculiar field of takeovers, which has already arrived not just to Western but also to Central and Eastern Europe (e.g., the takeover attempt targeting the Hungarian national oil & gas company “MOL” by its Austrian counterpart “ÖMV” in 2008) and is spreading beyond.

            The material covered is complimentary especially with the following courses offered by LEGS IBL: capital markets and securities regulation, comparative secured transactions law, the legal aspects of corporate governance and accounting for lawyers. Students specializing in corporate law and advanced contracts may find the course useful as well.

Learning Outcomes: 

Core Learning Area

Learning Outcome (or Educational Objective)

Methods used for assessing learning

 

Interpersonal Communication Skills

 

Mastering the complex terminology of bankruptcy law.

  1. One of the aims of the closed book part of the final examination is exactly to test the understanding of basic legal terms. In the open book part, correct use of terminology will be also taken into account in grading.

 

  1. The interactive way of teaching is meant to assess the students’ oral communication skills. 

 

 

 

Technology Skills

 

Students are expected to find themselves the statutes/laws discussed during the course.

Independent research and use of internet-based legal materials will be taken into account in grading the overall performance of the students.

 

 

Cultural Sensitivity and Diversity

 

Besides the fact that the course is based on comparative law approach – what in and of itself introduces the students into the diversity and cultural sensitivity of doing business nowadays – special emphasis will be given to fundamental differences among legal families. For example, the differing bankruptcy philosophies and the consequences. 

 

The exam questions themselves take account of the diversity, and thus the students are [often] expected to think and answer from the perspectives of more than one culture/legal system.

 

 

Critical Thinking

 

 

The comparative teaching method will show to the students that as a rule more than a single model of solving legal problems is available. This, in other words, requires critical thinking esp. about one’s own legal system and stimulates critical thinking also about other legal systems.

The comparative teaching method is to show the students that problems are solved by various legal systems differently and that will make and provoke the students critically assess the solutions known to them.

Assessment: 

The final grade will be made of the following components:

Final exam                                                                                           

          - closed book part:                                                                             40%

         - open book part:                                                                                40%

Constructive class participation                                                                 20 %