Unbundeled Shares: Circumventing Corporate Nationality Rules Through Swaps, Options and Other Devices

• Authors: Russell Stanley Q. Geronimo
• Languages of publication: EN

Abstracts

EN

Corporate nationality clauses have a simple and seemingly innocuous language: “corporations at least X per centum of whose capital is owned by Filipino citizens”. This presupposes that “capital” is a unified bundle of economic and control rights. However, modern finance and contract law can “unbundle” economic rights from control rights through the use of options, swaps, forwards, hybrid instruments, variable interests, and a vast catalogue of contractual arrangements. Unbundled economic rights allow foreign investors to have economic interest without ownership of shares, and unbundled control rights allow foreign minority stockholders to have effective control without majority of voting rights. Does this circumvent foreign equity limitations? Do the control test, beneficial ownership doctrine and other corporate nationality rules render them illegal?

• Publisher: Uniwersytet Gdański
• Journal: Financial Law Review
• Year: 2018
• Issue: 11(3)
• Pages: 13-45

Dates

published

2018-11-17

Contributors

author

Russell Stanley Q. Geronimo

Identifiers

DOI

10.4467/22996834FLR.18.014.9304