OVERSEAS INVESTMENT CORPORATION PLC (OIC)

Overseas Investment Corporation PLC (OIC)



Overseas Investment Corporation PLC (OIC)

Introduction

Mostly companies are now focusing on raising finance to meet their various needs, like research and development, investment and others. However, there are certain issues that limits a company to raise finance to meet its different needs among them legal aspect is the major cause. Raising finance for a company involve several legal aspects which if not taken care in advance could create many problems. As an important activity of an enterprise, financing is restricted by laws. It's very significant to know the legal issues related to raising capital in the United States and U.K, including the differences between these two countries. This paper will introduce and discuss the legal issues on the right of Overseas Investment Corporation PLC (OIC) to raise finance for the research and investment purposes(Kelly, 1999, pp. 19).

Discussion

OIC's rights to finance and the regulatory regime with respect to financing in the U.K

U.K adopts relatively strict regulatory regime with respect to financing. As a result, it's regulated by the law system. The behaviors of organizations are always regarded as “Illegal Fund-Raising” and “Illegal Securities Activities” due to their irregularities in financing. So, it will incur criminal and administrative liabilities. There are crimes of frauds in issuing stocks or bonds, such as “crime of taking deposits from the public illegally,” “crime of issuing stocks or enterprise/company bonds absent required approvals”, “crime of illegal fund raising by fraudulent means” and “crime of illegal business”. Besides, companies in other countries possess unequal rights to finance. The right of raising capital includes issuing an IPO and debenture openly, which must be verified and approved by the governmental regulatory bodies. Otherwise, any enterprise or individual can't issue shares and bonds at all. However, in the United Kingdom, mechanism of registration with respect to securities issuance is well established. In the U.K., an organization need to register, fully and truthfully disclose information in order to raise finance through issuing securities. The rights to finance are automatically obtained and fairly equal. There is private placement mechanisms not involving public offering in the U.K., certain small-amount issuances are exempted from registration. All in all, the legal infrastructure is friendly to enterprise financing(Mcallister, 1999, pp. 7).

General Laws of enterprise financing through securities

U.K's Securities Law does not prescribe the definition of “securities”. Securities in enterprise financing are limited to two types: stocks and corporate bonds. Investment agreements, stock certificates limited liability companies are not “securities”, and thus not regulated by Securities Law. As a result, the adjusting range of Securities Law is very limited, which only includes how to offer stocks and company bonds publicly to finance and how to trade on a stock exchange.

However, another definition of “securities” under Securities Act of 1933 is broad. In that law, almost all the activities of investment and public offering stocks & company bonds to finance are adjusted. For that reason, investment agreements, even angleworms and prints are deemed ...