Equity And Debt Decoupling: Derivative Instruments Challenge Fundamental Assumptions Of Corporate And Bankruptcy Law.

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Equity And Debt Decoupling: Derivative Instruments Challenge Fundamental Assumptions Of Corporate And Bankruptcy Law.

The rapid growth in derivatives as hedging instruments, particularly through equity swaps, credit default swaps ("CDS") and loan credit default swaps ("LCDS"), has challenged fundamental assumptions underlying corporate governance law, federal shareholder disclosure requirements and bankruptcy law. Corporate law has long relied on a "one share one vote" model, which presumes that a shareholder's economic interests in a corporation are inextricably linked to their voting power. Federal securities laws require significant shareholders to disclose their percentage ownership stakes, on the assumption that they are likely to vote their interests and that other shareholders are e...

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