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Periodical article Periodical article Leiden University catalogue Leiden University catalogue WorldCat catalogue WorldCat
Title:Legal Problems of Financial Assistance: A Comparative Legal Study
Author:Mwenda, Kenneth KaomaISNI
Periodical:African Journal of International and Comparative Law
Geographic terms:Zimbabwe
company law
Law, Human Rights and Violence
international relations
Economics and Trade
External link:https://heinonline.org/HOL/Page?handle=hein.journals/afjincol9&id=935&collection=journals&index=journals/afjincol
Abstract:In many countries the policy basis underpinning the law which prohibits companies to financially assist a person to acquire company shares is not clear. It is difficult to tell what type of mischief the law on the prohibition of financial assistance is trying to remedy. Indeed, financial assistance in acquisition of company shares does not affect the share capital of a company. This article compares the law in four, both developing and developed, countries. First, the author examines the law in two countries where financial assistance is now allowed: Australia and Zimbabwe. Then, he reviews the law of Zambia and the United Kingdom. The author argues that there is no justification to support the prohibition of financial assistance in acquisition of company shares. In developing countries such as Zambia, whose local investors may not have sufficient capital to participate in equity investment, and where the emerging stock markets are facing the problem of insufficient liquidity, financial assistance may prove to be an important incentive to attract investors to the market. However, financial assistance must be permitted on condition that certain prerequisites are met by the assisting and assisted parties, as is the case in Australia and Zimbabwe. Notes, ref.