Authorised capital as an instrument for the leveraging of control over company
Journal Title: Zarządzanie i Finanse - Year 2015, Vol 13, Issue 1
Abstract
The institution of authorised capital is relatively new on the Polish market Giving the management board the discretionary power to choose a date for the share issue, and to determine both the entities that will acquire shares and the timing and a form of payment for the shares, means that the board gains some of the competence of the general meeting of shareholders This may give rise to mo- ral hazard and pose a risk of transferring control over the company into the hands of the entities selected by the management board. Anticipating such a threat, the legislature has into the Commercial Companies Code a number of restrictions on decision-making freedom of the management board in this area. However, these restrictions do not reduce, in any way, the possibility of using authorised capital as a tool to leverage control by majority shareholders. The paper presents the results of a study on the population of Polish public companies listed on the Warsaw Stock Exchange, which provided answers to the questions about frequency and the way of using authorized capital. The study consisted of three stages. In the first one, companies in which this prerogative was granted to the board., were identified, based on the analysis of the articles of asso- ciation. In the second one, companies in which this right had been executed by the management were selected. Then the issue parameters were analyzed with the help of the author’s indicator of the degree of leverage control.
Authors and Affiliations
Agata Adamska
Keywords
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