What Is Meant by a Change in Corporate Control? List and Describe the Various Ways in Which a Change of Corporate Control May OccurEssay Preview: What Is Meant by a Change in Corporate Control? List and Describe the Various Ways in Which a Change of Corporate Control May OccurReport this essayCorporate control has to do with a change in direction for a company. This change in direction for a business happens a couple different ways. One form of corporate control that forces change happens when two or more businesses merge together to form one company. This merger or acquisition forces changes at all levels of the organization. The monitoring, supervision, and direction of a corporation or other business organization can change overnight once company merges with another company. Another change in corporate control is with the consolidation of voting power for small group of investors. This change may occur in small groups like: leverage buyouts (LBO) and management buyouts (MBO). By transferring ownership of business unit control from corporation to small group changes management structure in the way they monitoring and supervise the organization.
There are various ways in which a change of corporate control may occur within any business. When a company is being faced with an acquisition situation, what happens to the companys assets is a great concern. Another concern about corporate control of assets is purchasing new assets and how this will be handled with the merger between two companies. The consolidation of voting power changes how the company makes business decisions and how the organization is handled and communicates changes so the business can continue to operate successfully. When a company goes through what is called a spin-off, it is creating a new subsidiary or division in hopes of creating positive change for shareholders. The change in corporate control would transfer to the newly formed organization in order to allow for growth and effectively compete in the market place.
The Corporate Governance Reform Act
A change to corporate governance is a common occurrence in corporate governance proceedings. At its most basic, this is a change in structure that would require an increase in corporate governance.
A Corporate Governance Review Board (GRLB) is appointed under the Bill C-30 by the President of Canada, and is responsible for the legislative work of the government of Canada through the Parliament of Canada, the Government of the European Union and the European Parliament of Great Britain and Northern Ireland and the Council of Europe on Corporate Governance Reform (CFR-EU) as well as for the review of the legislation and recommendations made by the Commission on Corporate Governance Reform.
With the formation of these boards and the GRLB, businesses and individuals have been able to put their own concerns and agendas in front of the Commission. In a recent report on Corporate Governance Reform presented to the Canadian Public on a day that saw the passing of legislation, this report indicated that a number of corporate-owned companies and individuals may be affected by the change.
In light of this report, it is important that corporations and individuals remain vigilant in working to protect a diversity of issues and to make sure that their voices do not get heard.
Companies Can Help The Coalition on Corporate Governance Reform
Canada’s Corporate Governance Reform Act (CGRRA)
This Bill is a law passed at an early stage of the development process. As amended in the Bill Bill C-30, the Corporate Governance Reform Act protects corporations that create and control a business over the time period the business becomes the operating director and the head of the company.
The proposed amendments include the following:
The amendments to the Corporate Governance Reform Act give the Commission the powers to set corporate governance policies and other matters to be brought before the Parliament and to approve changes to corporate governance. For example, the proposal provides for a time-shifted Board of Directors for each person appointed to the Board.
The proposed amendments empower the Commission to:
Review proposed changes to corporate governance policy and make recommendations on proposed measures to promote shareholder value of the company.
Reimpose or amend proposed changes to the Board’s rules and set limits on the Company’s ability to act as the board of directors on or after January 1, 2006.
Prohibit shareholders of a corporation from voting on or after January 1, 2006.
The proposed amendments provide that:
Any shareholder of a corporation who does not have the right to vote has the right to request a Board of Directors who will evaluate, take decision and approve the amendments to the Corporate Governance Reform Act.
The Companies may also consider setting up a Commission where a Member Company is the CEO only.
Businesses Can Use Corporate Governance Reform Agreements
The Bill C-30 further includes an agreement by corporations that can benefit from business collaboration and accountability. For example, while a party may have the right to set the company’s corporate governance standards under its corporate governance agreements, the right of an entity to share control or any of the related assets held by that entity falls outside the scope of that agreement.
The following section provides a list of possible businesses involved in the consultation process for corporate governance of a particular corporations:
Corporate Governance Agreements Related to Corporate Governance Agreements
A number of businesses that have engaged in the consultation process under the Bill C-30