Protection of minority shareholders from financial tunneling: The case of Bosnia and Herzegovina

Abstract

In this article we examine legal protections against financial tunneling available to minority shareholders in Bosnia and Herzegovina. We analyze legal rules that specifically address the most common forms of financial tunneling in both entities of B&H, their application in practice, and compare them with the adequate protections provided to minority shareholders in comparative laws. Before introducing company law changes in 2008 in Federation of B&H was registered a significant number of cases of joint-stock companies delisting and going private. There are indications that those transactions occurred without any compensation given to minority shareholders of those companies. In the article we focus on these cases and use experiences from other transition countries to evaluate the protections offered by entity company laws and propose their future improvements.