Task objectives and demarcation of research

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Market efficiency

OFFER REGULATION UNDER THE 2008 COMPANIES ACTThe gist of efficient capital markets is that companies with good prospects raise money by issuing securities, whereas companies that are judged as poor investments will have difficulty in raising any substantial amount of capital.14 Where investors are capable and enabled to rationally judge their investment decisions, capital will be allocated to companies that can use it well and kept away from companies that will misuse, apply it poorly, or commit fraud with said funds.15 Efficient capital markets allocate resources in a rational manner, focusing investment towards sustainability.16 This process underlies shareholder capitalism as evident in the United Kingdom and the United States as well as South Africa.Market efficiency is coupled with investor protection in that it proposes a  symbiotic relationship.

Regulation

It follows that the expectation of return on an investment as posited,should be against the backdrop of a system of investor protection. In regulating the process of offering and subsequently acquiring investments in an enterprise, be it a start-up or multi-national established corporate entity, the disclosure of relevant financial information manifests as a system of regulation.

Stages of development

Offer regulation is a recent phenomenon with developments manifesting during the mid-nineteenth century and most significant developments arising during the last 78 years.3 In addressing market inequities, securities regulation followed the doctrine of disclosure4and anti-fraud provisions which have been introduced due to the legislators in England (and eventually in South Africa by way of importation) reacting to abuse of offers to the public for the subscription of shares.5
Stronger legislative controls were put in place regarding disclosure, holding that when sufficient information regarding the company and the offer is published investors will be able to take informed decisions, therefore guarding their own interests when considering the merits of the offer.6

Regulation as intercession

Regulation is opted for in all countries, relative to no regulation.10 Historically, company law has evolved in an attempt to address abuse and counter fraud.11 When government believes that a company, if left to its own devices, will behave in a fashion detrimental to the objectives of government and of the objectives of the company, regulation into the affairs of the company will occur.12 This is done by virtue of the powers of government as well as its obligation to ensure a just society based on the rule of law.

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Philosophical framework

The principles underlying offer regulation and securities law should not be seen in isolation from each other or the Grundnorm and it is submitted that the principles are dependent upon each other. If the argument is that the Grundnorm is to comply with a single requirement, that requirement is that of efficiency. Inefficiency results or should result in developmentsand evolvement of the law, aimed at achieving a state of efficacy in regulation.

Security offer regulation

South Africa has always opted for offer regulation by means of qualifying criteria which pre-empts disclosure requirements. Once a public offer of securities is qualified, disclosure by means of prospectus requirements is provided for, with the regulatory provisions putting emphasis on when disclosure is required, who must disclose and the extent of disclosure, depending on the capital market where the shares are to be traded.1 The capital markets are of course the primary and secondary markets. The basic principles that put Chapter 4 offer regulation into effect are that there is an offer for shares and the offer is to the public, disclosure is required.2 The offer is in terms of the common law as well as in terms of the Companies Act and aimed at concluding a particular type of contract. Capital market transactions are divided into primary and secondary market transactions based on the nature of the transaction.

CHAPTER 1: GENERAL ORIENTATION
Task objectives and demarcation of research 
Concept of offer regulation
Premise of complete law and hypothesis Methodology
CHAPTER 2: CONCEPTUAL FRAMEWORK
Elucidation of concepts
The corporate entity
Market efficiency
Acquisition of capital
CHAPTER 3: HISTORICAL DEVELOPMENT
Historical development
Stages of development
United Kingdom 
Historic stage 
 Post Historic stage 
Reformist stage
CHAPTER 4: PRINCIPLES OF SECURITIES REGULATION .
Regulation as intercession 
Philosophical framework 
Regulatory design 
Primary regulatory principles
Investor protection 
Efficient capital markets
Secondary regulatory principles

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