Company transactions in solvency crisis (5op)

Osaamistavoitteet

This course aims to provide the students with general idea on how nearing insolvency affects what is acceptable corporate behavior. The course is not limited to single branch of jurisprudence. It aims to provide the student a comprehensive view on how assets can be transferred from a corporation. The restrictions to transfers come from company law, criminal law and insolvency law. Upon completion the students will:

- Recognize the multiple branches of law affecting corporate behavior
- Recognize the limitations the transfer of corporate assets has
- Know the basic requirements of dividend distribution, the duty to refund an unlawful distribution and liability in damages caused in corporate context
- Know the basic structure of economic crimes committed by the debtor
- Know the options available in insolvency proceedings for recovery of assets
- Be familiar with the doctrine of piercing the corporate veil

Sisältö

In the course of normal business the corporate actors are relatively free to take on projects, move assets around the corporate group, pay dividends or contract with close parties. Mainly these actions are allowed by the law on Limited Liability Companies, if they do not cause the corporation to become insolvent or otherwise harm the corporation. The available remedies are duty to refund an unlawful distribution and liability in damages.

When insolvency becomes apparent the actions are further restricted. Criminal Code of Finland forbids the debtor to make any distribution, transfer, destruction or hiding of asset if the action causes insolvency or essentially makes it worse. Additionally, the debtor is obliged to provide accurate, true and comprehensive information about her assets when an insolvency proceeding has been initiated.

Within the insolvency proceeding there are several methods to recover or disregard the actions of the debtor. The act on the Recovery of Assets to a Bankruptcy Estate allows the recovery of assets transferred with legitimate transactions. Both the Bankruptcy Act and the Enforcement Code allow for the disregard of the given legal form if it is obvious that it does not match the reality of the case. This allows defusing of arrangements where assets have been attained and maintained as the property of one person whereas in reality they belong to the debtor.

If all the before mentioned remedies fail, there is the final possibility of piercing the corporate veil. It is a doctrine based entirely on case law that allows disregarding the separate personality of corporations or the limited liability of shareholders. It means extending the liability to a party that is not formally liable. Veil piercing is very controversial and its application is rare. The doctrine has developed in quite similar fashion in all the major jurisdictions.

Arviointikriteerit, tyydyttävä (1)

1–5, fail

Toteutustavat

The course is entirely online course. The course is organized once in the fall and once in the spring. The optima section dedicated to the course is open outside the course periods. Thus nothing prevents the students from doing the required work outside course period. However, evaluation, course credits and feedback are provided only during the course period.

Work required

1. Lectures 10 hours (available online) + 2 page paper discussing the subjects of the lectures
2. Court case analysis 4 pages
3. Written analysis 10 pages

- Choose your own topic related to the lectures. Analyze legislation, case law and issues
- Required comparative element. Some comparison between a freely chosen legal system and the Finnish system