13.6: Company’s Legal, Business, Financial, Ownership, and Tax Practices
- Page ID
- 22687
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Company’s Legal, Business, Financial, Ownership, and Tax Practices
- Major changes in ownership, managerial, legal, regulatory, and operating structure
- Overfocus of management time and resources on creating complex corporate legal entity, operating, finance, and tax structures (particularly if this is accompanied by intercompany asset sales, transfers, or fee payments)
- Existence of seemingly excessive number of corporate legal entity vehicles (particularly those with limited or no clear operational mandates)
- Heavy reliance on tax shelters or similar devices to maintain or maximize profitability
- Management inability or unwillingness to explain reasons behind corporate-, finance-, tax-, or ownership-structure complexities
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Aggressiveness or complexity in financial leverage and structure, including
- high degree of leverage versus peers;
- stability of capital structure susceptible to refinancing risk;
- over-reliance on short-term debt;
- management inability to explain rationale for capitalization structure and financing sources and uses;
- complexity or untoward number of financing subsidiaries or other financing vehicles within the corporate structure;
- Overly structured financing arrangements.