Legal features of corporate rights use as loan secured: threats to creditors
Introduction. Corporate disputes in the case remains one of the most interesting categories of cases considered by the courts. To date, the share of corporate disputes, among other civil cases is not very high. However, such cases are significantly relate to a large number of different number of participating institutions of law that gives special importance to corporate conflicts among civil disputes. Furthermore, there are still a number of problems in practice conflict resolution associated with the transition of corporate rights and transfer them to bail.
Purpose. The article is to identify risks arising to lenders through domestic legal aspects of the transfer of corporate rights as collateral.
Methods. Comparison, analysis and synthesis, induction and deduction, methods of structural and functional analysis, legal simulation, systematic method.
Results. It was established that the use of corporate rights as collateral can be quite risky for lenders. Risks and characteristics that accompany the process of implementation of corporate rights that were transferred as collateral, in domestic economic and legal realities are identified. The international experience of pledge of shares (on example on the British practice) is studied. Legal aspects of the transfer of the collateral in the charter capital of a limited liability company (LLC) in Ukraine are concretized.
Originality. The list of risks in the legal plane, accompanying the procedure using corporate rights as collateral is offered. The features of the transfer of pledged shares and stakes in companies with limited liability are identified. British practice features of foreclosure practices for shares pledged are concretized.
Conclusion. The feature of corporate rights as collateral is that they have complex nature within the meaning of law, as proprietary and non-proprietary. However, they have indivisible character, as the basis of their appearance and existence is the only circumstance - namely individual ownership share or shares in the authorized (founding) capital business partnership.
According to international experience (such as under British law), there are three main ways to foreclosure of the shares pledged. They are: the sale of shares (the mortgagee is entitled by law (implied right) to sell the shares that are pledged without the need to apply for a court decision, provided that the security agreement was concluded in a special writing «deed»); destination manager property (receiver) - mortgagor may itself appoint the trustee if such right is expressly provided in the contract of pledge, or apply to the court for the relevant purpose; and recovery actions (appropriation) - allows the mortgagee to exercise penalties directly without having to apply to court for appropriate decision and without the involvement of third parties.
Use bail corporate rights as a way of providing credit obligations of the borrower, on the one hand, carries significant legal risks, and on the other - can be an effective mechanism for ensuring the rights of the creditor on condition of qualitative due diligence, as well as competent legal approach to structuring the transaction, based for facilitating the recovery of collateral in case of bankruptcy and liquidation of the debtor.
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