The master's thesis deals with an array of legal and economic issues, related to the Article 498 of the Slovenian Companies Act, which governs shareholder loans and their treatment in insolvency procedures. The conflict of interest between shareholders and creditors, which arises when a company faces financial difficulties points to the need to protect the creditors from inequitable actions of shareholders, which are inconsistent with their long-term role in the company's capital structure. Slovenian rules on shareholder loans are based on the since-reformed German Act on Limited Liability Company. Therefore, a comparative analysis was performed to point at possible alternative legislative approaches to defining the key elements of the legal concept, namely the terms shareholder, financial crisis and loan. To effectively fulfill the purpose of the legal construct, the term shareholder must be understood so it includes horizontal transactions between connected companies, which are controlled by the same shareholder. The key issue of Art. 498. ZGD-1 is defining whether at the time when a shareholder granted a loan, the company was in financial crisis. Defining the state of financial crisis is a non-standard process, which, although practical to execute through performance of the Creditworthiness test, can lead to contradictory results. This view is confirmed by the empirical analysis, performed amongst banks operating in the Slovenian banking sector. Broad understanding of loans, which qualify as shareholder loans in terms of Art. 498 ZGD-1 leads to several impractical outcomes, especially when it comes to secured shareholder loans and treatment of shareholder loans in corporate restructurings. There are thus several substantial issues, which call for a change or an amendment of the existing legislation.
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