Course description

Company Law and Finance

Introduction

This course integrates corporate law and corporate finance. A corporation is a separate legal entity and can be viewed as a vehicle for making-, organizing-, and funding investment decision. The course gives an advanced treatment on Norwegian corporate law, which is completely harmonized with EU-law, with an emphasis on the regulation of the companies’ capital. In a limited liability corporation, shareholders have delegated investment decisions to the board of directors and an administration (the Chief Executive Officer, Chief Financial Officer, etc.).  The course will establish a framework for how an administration ought to make investment decisions on behalf of shareholders.

Norwegian Company Law is completely harmonized with EU Company law.

Course content

In this course description we are using the terms “The Limited Liability Companies Act” and “The Public Limited Liability Companies Act” to refer to “Lov om aksjeselskaper (aksjeloven, asl.)” and “Lov om allmennaksjeselskaper (allmennaksjeloven, asal.)”, respectively. Collectively we are referring to aksjeloven and allmennaksjeloven as “The Limited Liability Companies Acts”.

Corporate Law

1. The principle of duty to make profit in the Limited Liability Companies Acts, emphasizing the tradeoff between Corporate Social Responsibility (CSR) and the principle of duty to make profit.

2. Equity

Share capital/equity
The Limited Liability Companies Acts § 3-4 og § 3-5
The Limited Liability Companies Acts § 3-6
Overview of the regulations that aims to protect the companies’ capital

3. Holding companies and intra group transactions

The definition of a holding company in the Limited Liability Corporation Acts, ref. The Limited Liability Companies Acts § 1-3
Intra-group transactions, ref. The Limited Liability Companies Acts § 3-9
The Limited Liability Companies Acts § 8-7, § 8-8, § 8-9 og § 8-11
ref. The Limited Liability Companies Acts § 6-28 og § 5-21 and the articles of association

4. Minority squeeze outs and valuation of minority interests

5. Cash dividends

6. Shareholder Loan Agreements

7. Stock repurchases

8. Writing down the book value of common equity

9. Company dissolution

10. Important considerations when choosing organizational form

 

Corporate Finance

  1. Value and Capital Budgeting
    1. Discounted Cash Flow Valuation
    2. Net Present Value
    3. Making Investment Decisions
  2. Risk and Return
    1. Returns
    2. Measuring risk
    3. The Capital Asset Pricing Model
    4. Risk and Cost of Capital
  3. Capital Structure
    1. Introduction to Long Term Financing
    2. Capital Structure and Corporate Value
    3. Limits to the Use of Debt
  4. Corporate Valuation

Learning outcome knowledge

The students will acquire knowledge on:

  • the regulation of the companies’ capital
  • the importance of cash flow
  • the difference between systematic and unsystematic risk
  • the effect of diversification on risk and return
  • the Capital Asset Pricing Model
  • how market forces influences the cost of capital
  • principles of investment decisions
  • the link between Net Present Value and corporate value
  • the effect of leverage on expected return
  • the Weighted Average Cost of Capital
  • Corporate Social Responsibility (CSR) and the tradeoff between CSR and the principle of duty to make profit

Exam organisation

  • Written assignment: 50%
  • Written exam: 50%