Melbourne Law School - Theses
Permanent URI for this collection
Search Results
1 - 1 of 1
-
ItemIssues in private equity(University of Melbourne, 2009)The emergence of the sub-prime credit crisis in late 2007 brought an end to an unprecedented period of dynamic private equity activity. During that period; spiralling asset values, an oversupply of credit and low interest rates produced particularly fertile conditions for leveraged buyouts. As a result, long-standing buyout records tumbled as many of the largest listed corporate entities were taken over and de-listed. The ensuing proliferation of public to private buyouts captured the public attention not only because of the massive scale of the deals, but also, given the prominent nature of the target companies, because these buyouts reshaped the face of capital markets world-wide. As was inevitably the case, the high profile of the private equity business attracted the attention of regulators and commentators. This heightened public focus on private equity unearthed a number of regulatory issues. This thesis explores several of those issues. This thesis considers the following two broad topics which to date have not been substantially examined: a) the corporate governance issues relating to directors of target companies in a friendly private equity acquisition context; and b) the taxation of carried interest fees. The relevant Australian legal framework for each of the above topics is analysed through the lens of the novel factual circumstances presented by private equity transactions. As a result of the lack of Australian material, this analysis will be partly carried out as a comparative analysis. The United States was the most active jurisdiction for private equity activity during the previous economic boom and consequently has an abundance of relevant judicial and academic commentary. it is the logical choice as a source of comparative material. In relation to the above topics, it is found that: a) there exist deficiencies in the law of Australian corporate governance when applied to friendly acquisition situations. They are deficiencies which introduce uncertainty into the role of directors in those situations and consequently impinge on the efficient operation of corporate businesses and the take-overs market. They are deficiencies which warrant rectification; and b) it is possible for carried interest remuneration arrangements to be structured to obtain concessional taxation treatment. This is likely to result in a loss of taxation revenue.