Search results for: 'shareholders agreement'
Iberian Lifts, S.A. DO1-155-I
Iberian Lifts is a manufacturer of elevators, which is experiencing a serious financial crisis. The shareholders—the founder’s sons—are selling their shares for a nominal €1 to their main supplier Nomo Electronics. The new owner of the company, Alberto Nogales, has appointed Lucas Alemany as managing director of Iberian Lifts. Up until this time, Alemany has been director of operations at Nomo Electronics.
The morning after signing the share purchase agreement, Nogales is visiting the plant. During his tour of the factory, an incident involving two workers occurs which leads to their dismissal without any warning. The manager of that section is also fired for not carrying out orders.
In the afternoon, Nogales leaves the factory to return to Nomo Electronics’ offices, situated in another city. Alemany remains as the top executive and is unsure about what will happen the following day with the union representatives regarding the dismissal of three colleagues. He is not sure if Nogales’s actions will increase the social tension in the factory even more, or, on the contrary, if it will facilitate the management of the changes to be made.
This case is very well suited as a first approach to the case method for students, especially given its short and concise format.Academic Area:Operations & Supply Chain Management
SET THE CONTROLS FOR THE HEART OF TELECOM CG1-129-I
The main objective of the case is to discuss how to account for active investments in other companies according to International Accounting Standards. The application of IAS 27-28-31 is put to test due to the peculiarity in the ownership structure.
The case tells the story of the investment that Pirelli made into Olivetti and Telecom Italia between 2001 and 2006. Olivetti was a manufacturer specialized in computers and printers, whereas Telecom Italia is the dominant telecommunication company in Italy. Olivetti was acquired by Pirelli&C and Edizione Holding S.p.A through a vehicle company (Olimpia S.p.A). Pirelli&C is a leader as manufacturer of tires and cables, whereas Edizione is a financial holding that controls the Benetton Group. Both buyers represent part of the Italian economic leadership. In fact, Pirelli&C and Edizione Holding are the financial wings of two Italian industrial families Pirelli (whose leader is Mr. Marco Tronchetti Provera) and Benetton (with Mr. Gilberto Benetton as its leader).
The Italian corporate governance system is well suited for this case because of three distinguishing factors: pyramidal structure, interlock of directors and shareholders’ agreements. They are all present in the case. Within this system, it is possible to control a listed company without being the majority shareholder. A situation like this is therefore an interesting case to test how to apply International Accounting Standards on consolidation.Academic Area:Cost Accounting & Management Control