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Residual Claim

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Residual claim
Related: Equity claim

Equity Claim
The right of a shareholder or some other party to the profit of a company after all prior obligations have been paid. Equity claims are perhaps most important in the event of the company's liquidation. Equity claims are also called residual claims.


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79) He again admitted that "economists have recognised that residual claim and control rights are two major components of ownership", but he still omitted the control right "by assuming that the control right is a derivative of the residual claim".
When a management team engages in an LBO it reduces the incentive and opportunity for shirking by concentrating residual claims and reducing free cash flow - cash flow in excess of the amount that can be invested profitably in the firm.
Satyam had sought a High Court injunction in London in September 2007 to try to block the Texas case, arguing that a 2003 commercial agreement terminating the relationship between the two companies precluded all future claims against it for all past practices and that any residual claims against it had to be tried in London.
 
 
 
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