030297 KU Public Markets, Securities Regulation and Corporate Governance (2023S)

Raising capital by issuing securities to the public (“going public”) fundamentally changes a company. While going public may lower the cost of capital and facilitate growth, governments in all major economies regulate public companies by adding requirements intended to protect the investing public and ensure the efficient operation of public capital markets. These include: 1) requirements for disclosure of company information, 2) prohibitions of certain behaviours after a company’s shares or bonds are listed on a stock exchange and 3) granting investors certain rights to participate in the governance of the public company. The dynamic created by these inter-related requirements drives the public capital markets: Available information strongly influences investor buy-sell decisions, which, in turn, causes the price of the security on the exchange to change and activist investors to take notice.

Why would a company shift from selecting its own private financing (provided for example by a venture capital or private equity fund) to offering its shares to the general public, and how is this choice affected by where the company is based? How do public capital markets operate and who regulates them to ensure that they are efficient? Specifically, what should the role of government be in setting standards and policing their compliance? And finally, what does it mean to be a “public” company and how is management affected by large institutional investors, hedge funds and the like?

We will explore these and other questions in our four-week course taught by experienced practitioners in the fields of corporate and financial law, investments, and financial market supervision. The introductory part of the course offers a basic explanation of corporate finance terms and processes, financial market actors and their regulation. (No prior knowledge of capital markets law or finance is required for this course.) Thereafter, we address key topics in securities regulation and compare regulatory approaches to them in the US and the EU. These topics include:
• The Initial Public Offering Process and Listing Shares on a Stock Exchange
• Corporate Disclosure and Insider Trading
• Corporate Governance, Corporate Performance and Shareholder Rights
• Transactions that Lead to a Change of Corporate Control (Hostile Takeovers, Mergers and Acquisitions).