BUSINESS LAW II
5- SECURITIES
DR. ABDELRAHMAN MOHAMED SAYED
SECURITIES REGULATIONS
•Businesses raise much of their operating capital by
issuing securities. A security is
(1) a share, participation, or other interest in an enterprise or
other property or
(2) a debt obligation. Stock (or an equity security) represents an
ownership interest in a business, and a bond (or debt security)
represents an obligation to pay money.
SECURITIES REGULATIONS
•A security can take several forms:
If it is in the form of the “type commonly dealt in on securities exchanges,”
it is called a certificated security. Such a security is a negotiable instrument
that can be transferred by negotiation.
If it is made out to a named owner, it is called a registered security
because the issuer must maintain a register with the names of the owners of
such certificates.
If it is made out to bearer (i.e., to whomever is properly in possession of the
certificate), it is a bearer security and no register of owners is maintained.
SECURITIES REGULATIONS
TRADING IN SECURITIES
•National governments ordinarily regulate securities transactions. This
includes defining the form that securities take, overseeing the markets in
which securities are traded, establishing disclosure requirements to protect
buyers and sellers, adopting clearance and settlement procedures, limiting
incidental to their principal business.
problems arising from applying different supervisory rules”.
