Author:	Gerry Nkombo Muuka PhD Associate Professor, Murray State University
Subjects:	Corporation Law (Other articles) Corporations Finance (Other articles) Finance Law (Other articles)
Issue:	Volume 6, Number 4 (December 1999)
Category:	Current Developments

1. Legal Aspects of Corporate Capital and Finance is a 160-page book that covers both the depth and breadth of legal aspects of corporate finance. Written in such refreshingly clear style, the book begins in Chapter One by looking at the legal aspects of debt financing.

2. Taking on a comparative perspective involving, inter alia, British, French and Polish law, Dr. Mwenda argues first that the legal problems associated with debt subordination are exaggerated, and secondly that the choice by a company of its capital structure is influenced not only by it financial policy to maximize shareholders' wealth, but also by imperfect market conditions.

3. He is of the opinion that such conditions-which include agency costs, inadequate liquidity, taxation costs, information costs and transaction costs-do in turn impact upon the efficacy of the legal rules governing corporate finance in Zambia.

4. The book then addresses contemporary issues in equity financing and public distribution of securities. Dr. Mwenda not only integrates existing knowledge on various issues, he also provides his own unique perspectives on issues ranging from allotment of shares and the par value concept to arguments in favour of a regional stock exchange in the Common Market for Eastern and Southern Africa (COMESA).

5. A book such as this had to meet certain rigorous standards for it to be published, especially in the USA. Dr Mwenda's book has passed the rationale test, because as a Zambian with impressive international experience he understands the need to share with others his Zambian and international experiences on the various subjects covered in the book.

6. He argues, for instance, that in the commercially sophisticated world in which developing countries increasingly find themselves, their financial laws may demonstrate weaknesses which result in part from a limited number of indigenous professional specialists, in particular lawyers, and in part from paying insufficient attention to parallel legislation in other jurisdictions.

7. On initial examination of the book's major characteristics and themes, one reacts positively not only from the variety of issues discussed, but also by the depth with which he does it. It therefore passes the face validity test. The chapter on the need to promote regional financial integration is particularly insightful in this regard.

8. With regard to the integration of existing knowledge test, Dr. Mwenda is cognizant of the fact that any field of inquiry can move forward only if it draws on and extends existing knowledge. He demonstrates this awareness throughout the 160-page book. It passes the readability/interest test, finally, in that he engages the reader's mind with relevant, practical illustrations that indicate how many of his ideas could be nationally and universally applied.

9. This latter point is ever the more important because the book has appeal-and will find a useful market-at many different and significant levels: university students and faculty both in Africa and abroad, part of the donor and lender communities (World Bank, IMF, UNDP); as well as policy makers across the African continent. A must read for the groups above and anyone with an interest in legal frameworks for capital markets.