- Title
- Corporate officers' views on cross guarantees and other proposals to 'lift the corporate veil'
- Creator
- Dean, Graeme; Clarke, Frank
- Relation
- Company and Securities Law Journal Vol. 23, Issue 5, p. 299-320
- Relation
- http://subscriber.lawbookco.com.au/lbcbin/lpext.dll/4/jnl_6/jnl.cslj-v.23/jnl.cslj-v.23-pt.5/jnl.cslj-v.23-p.299
- Publisher
- Lawbook Co.
- Resource Type
- journal article
- Date
- 2005
- Description
- Australian regulatory-approved Deeds of Cross Guarantee were introduced in the mid-1980s to, inter alia, assist business by relieving costs of preparing audited annual accounts for the guaranteeing subsidiary companies. Whereas the potential for direct cost savings arising from the Deeds has been reasonably well known, the potential relief under the Deeds from not providing proprietary information about subsidiaries' operations is less familiar. The quid pro quo for those reporting benefits are the cross guarantee covenants by which the holding company (for example, a chief entity) and a set of nominated (wholly owned or controlled entities) guarantee the debts of the companies subject to Deed. Those guarantee covenants extending the capital boundary provide potential, but to date unrealised, extended security for creditors. Despite the rhetoric promoting the quid pro quo creditor protection accompanying the introduction of the Deeds, survey and earlier case evidence indicates that the benefits appear to accrue more to the companies party to the Deeds than to creditors. This has implications for future regulatory policy related to corporate groups.
- Subject
- cross guarantees; holding company; creditor protection; regulatory policy; Deeds of Cross Guarantee
- Identifier
- http://hdl.handle.net/1959.13/34771
- Identifier
- uon:3696
- Identifier
- ISSN:0729-2775
- Language
- eng
- Reviewed
- Hits: 625
- Visitors: 1003
- Downloads: 2
| Thumbnail | File | Description | Size | Format |
|---|