Abstract

This thesis considers the corporate legal systems of Israel and Delaware as they address the subject of corporate distributions to shareholders. The thesis reviews the significance of cash dividends and the acquisition by corporations of their own stock, in the management and survival of corporations, the effect they have on the disposition of creditors, and the extent to which they are restricted by operation of law. The thesis demonstrates how dividends and share repurchases may translate into a transfer of value from creditors to shareholders. It considers the effectiveness of the legal capital in securing creditors’ interest, and concludes that the legal capital scheme presents no real obstacle to distributions. It is further concluded that despite the recent corporate law reform in Israel, Delaware’s corporate law system continues to surpass Israel in flexibility and broad approach to distributions. Nevertheless it is expected that Israeli courts will consider Delaware’s methodology on the matter.

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