Original scientific paper

https://doi.org/10.30925/zpfsr.39.4.8

DISTRESSED COMPANIES RESTRUCTURING AND CAPITAL MARKET – TYPES OF CONFLICT OF INTERESTS AND THEIR MANAGEMENT

Morana Derenčinović Ruk orcid.org/0000-0002-6624-7896 ; Licensing and Legal support Department, Investment and Pension Funds Division, Croatian Financial Services Supervisory Agency, Zagreb, Croatia

Abstract

The paper investigates how the capital market can be a restructuring platform for companies in difficulties and financial intermediaries who are typically involved in it and analyzes the conflicts of interest that may arise in that process and the way the conflicts could be prevented or managed. The paper focuses solely at the companies in difficulties whose shares (or other financial instruments) are listed on the regulated market of the Zagreb Stock Exchange d.d. and alternative investment funds, i.e. private equity and hedge funds and their managers as dominant players of the capital market segment that invests in companies in difficulties. After the presentation of the
peculiarities, i.e. legal and other factors affecting the restructuring of the companies in difficulties through the capital market, the paper compares alternative investment funds specializing in investments in companies in difficulties, showing their similarities, differences and specific features, including funds for economic co-operation, which
is a peculiarity of the Croatian capital market. The paper aims to clarify the concept of conflict of interest on the capital market from the similar concepts (i.e. opposing interests) and presents in detail which types of conflicts of interest are typically manifestated in the each phase of the investment process in relation to the company in difficulties and how those should be governed. The role of the Croatian Financial Services Supervisory Agency as supervisor and regulator of the Croatian capital
market is also accentuated and attention is drawn to the circumstances that should be taken into account by regulator when conducting its public surveillance powers in relation to observed conflicts of interest but not extending its powers to the privatelaw aspects of the relationships that are subject to supervision.

Keywords

capital market; restructuring; private equity; hedge fund; conflict of interests

Hrčak ID:

218338

URI

https://hrcak.srce.hr/218338

Publication date:

28.2.2019.

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