IPO(Initial Public Offering) Explained

Definition and the process through which it is acquired

What is an IPO?

An IPO is an initial that stands for the Initial Public Offering. An IPO refers to the process by which a company (as registered under the companies Act) decides to switch from private to public and in the process it is therefore required to sell off the stocks belonging to the company.

An IPO consumes quite some time for it to be accomplished. It requires good planning and some quality of consideration of certain aspects for it to be attained.

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It must be noted that a company cannot be able to sell it stocks to the general public if it has not conducted an IPO. The main reason being that, the IPO changes the status of the company’s shareholding from public to private nature.This does not mean that a company that conducts an IPO has no shareholders in the first place. A company that is privately owned has private shareholders.

Private shareholders are often few in number and hence such a company has lesser activities as compared to that with an IPO. When a company decides to go public, it, therefore, opens doors for the general public to buy shares from it and the company becomes subjected to regulations from Exchange Commissions like the Nairobi Security Exchange for the case of Kenya.

The company decides to adopt an IPO because of the following reasons:

1. Selling shares publicly helps a company to raise more money and pump it into business through re-investing or investing in other money-making projects.

2. A company that has gone public wins more trust and confidence from the general public as well as those who wish to invest in.

3. Having many shares and shareholders is a sign of prestige and it often gives a company an upper hand in securing of some business deals.

According to LOYAL3, there are six steps that a company, which has decided to acquire the status of an IPO go through (five are applicable in Kenya)

1. Bank hiring. The company has to hire an investment bank. The investment bank will then help the company to focus on the financial needs as well as the projected finances that are likely to be raised.

2. Submitting documents to Nairobi Security Exchange. The NSE is the agency that is mandated with the regulation of stock trading as well stock exchanges in Kenya. The documents are meant to explain the business of the company, the risks that are prone to happen and how the company is going to protect he investors.

3. Handing out the preliminary prospectors. This is a document that lists the estimated price range for one share of the company’s stock.

4. Going on a road show. This is now making the interests and the intentions of the company to go public known to the potential investors. Most companies, however, instead of going on a road show, they use the media to reach out to potential investors.

5. The agency mandated with the regulations of the stocks makes the statement public and gives a go ahead for the purchases to be made.

When a company acquires the status of an IPO, it becomes under the watch and scrutiny of the Nairobi Security Exchange (NSE) as well as Capital Market Authority (CMA). The company, therefore, is at liberty to disclose rules and regulations like holdings, investments as well as transactions of its employees including the directors at the helm of the company. The company practically comes under surveillance and its financial activities as well as the trading activities on the stock market are closely monitored. The company will also be required to announce its financial results quarterly and publicly and then full year financial results as well as holding a shareholders meetings.

Before investing in a company that has gone public, a potential investor is given time to go through the company’s prospectors. This is like an invitation that gives a clear overview of the shares being offered, the prices and is what an investor bases on to whether to buy or to subscribe for the shares in the said company.

Why must one read the prospectus?

This is a very important document. For an investor, it is the means by which one can judge how profitable and viable the investment is before one decides whether or not to participate in an initial public offer. An uninformed decision may cost an investor dearly. One must, therefore, read the prospectus very carefully and understand what is really at stake before he/she makes a decision. One should carefully assess the fundamentals of the company offering shares by studying the information provided. Though IPOs appear to be a good investment opportunity because of the general expectation of earning high initial returns, called premiums, risks do exist and there is no guarantee that prices may not fall once the shares start trading in the secondary market.

What one should look in prospectors?

What goes into a prospectus is currently governed by the Companies Act, the Capital Markets Act and the Capital Markets (Securities) (Public Offers, listing and Disclosures) Regulations 2002. While the contents of a prospectus are generally the same, the 3 3 presentation may vary from one issuer to another. By reading the prospectus, one may want to know about the future of a company and whether or not its business will grow.

Bigger turnovers generally mean bigger profits and therefore should lead to enhanced share prices. But numbers do not always tell the whole story. One needs to go over the prospectus with a fine toothcomb for hints on the company’s growth prospects and risk factors. An investor should also want to know who manages the company, what products it sells, who buys the products, and whether or not its business is sustainable. Key information on these aspects can be found in various sections of the prospectus. Investors need to scrutinize and seek advice where they cannot understand. This can be done by analyzing; Basic Information; indicative offering timetable; definitions; corporate directory; summary information; summary of share capital, issue/offer statistics, indebtedness and intended use of the proceeds; details of the public offering; business information; financial information; shareholders, directors and management information; risk considerations associated with business and prospects of company; appendices; and procedures for application and acceptance.

Sample opening statement 2 (for AlphonceMuoki)

 

May it please the court, my name is…, and I represent Mr.AlphonceMuoki who is the respondent. It is our case that the petitioner in this matter, Faith Mueni, does not and has never owned or held the parcel of land identified as L.R. No 9999 Machakos and therefore is ill advised by her counsel in asking this honorable court to making any orders regarding the said parcel of land. We will show the court that;

i) My client AlphonceMuoki was never married to Faith Mueni,

ii) All the contributions towards the purchaser of the 13 acre farm in Machakos (LR No. 9999) were made by my client Alphonce,

iii) Subsequently, Faith is not entitled to any share of the farm.

Your Honour, this court has just listened to a sensational presentation by the petitioner‘s side intended to paint my good client in bad light. It is not disputed that my client knew Faith Mueni; my client admits that they had a brief romantic liaison 13 years ago and got a child. My client not being one to abandon his responsibilities and as a way of making up for his indiscretions, out of the kindness of his heart offered to provide for the petitioner and their baby. It is sad that the kindness shown by my client has been abused to this point that we find ourselves at today. Thirteen years ago, Alphonce was a well-educated man working for the Ministry of Education making strides career wise. He meets Faith who is working as a waiter and they have a brief sexual liaison for ten months. They are blessed with a son and Alphonce is proud enough to give the child his last name, Sebastian Muoki. For whatever reason, the relationship turns sour and the two part ways but Alphonce is responsible and proud enough of his son that he supports them and even makes visits to Faith‘s home to be with him. Six months after their relationship has ended, Faith contacts Alphonce and informs him that she has lost her job as a waiter and is in need of a place to stay. She could rely on my client‘s kindness and sense of responsibility to act. Alphonce has held a relatively enviable job and has made something of himself, having been able to acquire loan facilities from a bank and buy a 13 acre piece of land near Katumani research institute on his own. Alphonce empathizes with the seemingly helpless Faith and agrees to put her up at his farm house even letting her work the land at no profit to himself and never demanding any rents. There is a clear understanding that this arrangement was merely temporary until my client finds a bride and starts his home at the farm. This is all contained in my client‘s sworn statement and he will testify to this.

Your Honour, the petitioner contends that she has been married to my client for 13 years and seeks to rely on the evidence of MzeeNyamai. MzeeNyamai is an 85 year old friend of Faith‘s parents and is in his own words ―the memory of the community‖. With all due respect MzeeNyamai has seen better days. He was 72 years when the alleged traditional marriage ceremony between my client an Faith took place. With ageing comes a lot of degradation physical functional and abilities such as memory and recollection bear the brunt. As ―the memory of the community‖ is it also possible that MzeeNyamai witnessed very many such ceremonies and is getting the participants confused? In his sworn statement he already makes the mistake of stating that Faith has 3 sons when in fact it is a son and 2 daughters. Alphonce is father to the boy and is responsible for him alone. The petitioner also seeks to rely on two photographs as proof of my client‘s alleged marriage to Faith. We admit that the photographs are authentic but they are not dated and the photographer cannot come before this Honourable court. We will kindly be requesting the court to indulge us in the rule requiring documentary evidence to be presented by its author. 

Termination of a Contract

 

All about:

1. Termination of a Contract

2. Termination of a Contract and Benefits and Wages

3. Termination of a Contract and Labour Laws in Kenya

Termination of employment can be initiated by either of the parties to a contract of employment (Employment Act, section 35 (1)). Lawful termination of employment under common law includes:

• Termination of employment by agreement: When the employer and employee agree to bring a contract of employment to an end following an agreement. This may be in case of terminating a contract of apprenticeship; where the period of training expires then the contract will obviously come to an end.
• Automatic termination: A contract of employment may be terminated automatically in circumstances such as death or loss of business of the employer.
• Termination of employment by the employee/resignation: This happens when an employee due to material breach of the contract by the employer decides to resign from his/her employment.
• Termination of employment by an employer: An employer may also terminate the employment of an employee but there is a need to comply with the provisions of the law and contract relating to termination. 

On what grounds can a contract of employment be terminated by an employer?

A contract of employment may be terminated by an employer on the following grounds:

• By mutual agreement between the employer and the worker (Industrial Training Act, section 13 (1) (a)).
• By the employer when the employee dies before the expiration of the period of employment.
• By the employer, if the worker is found by a medical examination to be unfit for employment. Due to sickness or accident, the employee becomes unable to carry out his or her work (Employment Act, section 41(1)).
• By the employer based on the misconduct of employee (Employment Act, section 44 (3)) 

What should an employer do if he or she wants to terminate a contract of employment?

A contract of employment may be terminated at any time by an employer who must give the employee a period of notice of termination (e.g. at the close of day in case of a contract for daily wages, one month or more in case of monthly pay contracts). 

What form of notice should I give as an employer?

A termination notice shall be in writing. In case the employee does not understand the notice, the employer is responsible to ensure that the notice is explained orally to the worker in a language he/she understands (section 35 (2) (3)).  

• If the employee is employed on a daily wage contract, the notice is given at the close of any day without notice. 
• If the employee is employed on a weekly pay or two-week basis the notice period shall be one week or two weeks respectively, given in writing or payment of one week’s salary in place of notice.
• If the employee is employed every month the notice period shall be 28 days and in writing or payment of one month’s salary in lieu of notice.
• In the case where a contract of employment provides that the notice of termination be given for a greater period than one month, then there will be agreed in writing between employer and employee for a longer notice and the agreed notice period shall be of equal duration for both employer and the employee (section 35 (2)). 

Can an employer terminate an employee immediately without allowing them to work during the notice period? Does the law allow this?

In the event, the employer wants to terminate an employee without allowing her/him to serve the notice period the employer will be required to pay the employee the amount that an employee would have received if she/he had worked during the notice period. This is what is usually referred to as payment in lieu of notice (section 36) also (section 38). 

Section 36 provides for payment of equivalent salary in place of notice instead of serving the notice. The length of notice will depend on the interval at which the salary is paid.

Must I, as an employer, pay for transportation after a contract of employment is terminated?

The law is silent about this kind of payment.

What happens if an employee is terminated but they have outstanding leave they have not taken?

In the case of accrued leave upon termination the employer shall pay an employee on a pro-rata basis an amount in cash for the accrued annual leave to which that employee is entitled (section 40 (1) (e)) - provided that it is taken not later than six months after the end of leave cycle or twelve months after the end of leave cycle if (if the employee consented or extension is justified by operational requirements) (section 28(4)). 

Can an employer terminate a contract of employment without notice?

Yes. Either party to a contract of employment may terminate the contract without notice if that party pays the other party a sum equal to the amount of remuneration which would have accrued to the worker during the period of the notice (section 36).

Is a certificate of service and notice mandatory even when terminated on misconduct?

Yes. Both are mandatory regardless of the reason for termination unless the period of service of the employee to the employer has lasted less than four weeks (section 51). 

Can I terminate an employee because I do not like her/him?

No. Under the law, four grounds may justify termination of the employment by the employer and these are:

• Misconduct.
• Physical incapacity.
• Poor performance.
• Employer’s operational requirements/retrenchment. 

An employer may also terminate an employee due to participation in an illegal strike. Therefore for an employer to terminate an employee he/she should have a genuine reason as specified in section 45 (2) and section 46. An employee cannot be fired because an employer does not like them - unless the grounds for this dislike are based on the above-mentioned factors.

What amounts to fair terms termination of employment?

For termination to be fair in the eyes of the law, it has to be both substantively and procedurally fair. The employer needs to have a valid and fair reason for termination. 

Apart from this valid reason of termination, the employer must follow fair procedures for termination as are provided under the Employment Act, section 45 (2) and section 46.). In any form of termination, the employer is required to prove the reasons for the termination otherwise it will be termed as unfair (section 45 (2)). The procedures for termination are different depending on the reason for termination but they all have a common item - the right of an employee to be heard before a termination decision is taken against an employee (section 41 (2)).

Am I to follow the procedure for termination even in cases where an employee is caught red-handed committing serious misconduct, for example, stealing?

Yes. Notwithstanding the serious misconduct of the employee, and the evidence available, the law requires that procedures outlined under the law be followed. Failure to follow the procedure will amount to summary dismissal, meaning an employee is terminated without being availed of an opportunity to defend herself/himself before a fair disciplinary committee. In labor laws, summary dismissal amounts to unfair termination with consequences specified in section 47 and 49 (1) & (3).

Can I terminate an employee who is facing a criminal charge before a court of law?

No one can terminate or take disciplinary action against an employee who is facing the same charges before a court of law unless the two charges are different or do not arise in the same cause of action. 

What are the likely consequences of unfair termination for an employer?

If the labor officer makes the decision that the summary dismissal or the termination of the contract of an employee is unjustified, he may recommend to the employer to pay the employee any or all of the following:

• The wages which the employee would have earned had the employee been given the period of notice to which he was entitled under this Act or his contract of service. 
• Where dismissal terminates the contract before the completion of any service upon which the employee’s wages became due, the proportion of the wage due for the period of time for which the employee has worked; and any other loss consequent upon the dismissal and arising between the date of dismissal and the date of expiry of the period of notice referred to in paragraph (a) which the employee would have been entitled to by virtue of the contract.
• The equivalent of several months’ wages or salary not exceeding twelve months based on the gross monthly wage or salary of the employee at the time of dismissal.
• Alternatively, the employer may have to reinstate the employee and treat the employee in all respects as if the employees' employment had not been terminated; or 
• Re-engage the employee in work comparable to that in which the employee was employed before his/her dismissal, or other reasonably suitable work, at the same wage.
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• For PDF Version of notes just send a request mail to ---gechangazacharia@gmail.com---

Writing your Dissertation/Research Paper

1.  The Introduction

As a general rule, your dissertation introduction should generally do the following things:

• Provide preliminary background information that puts your research in the context
• Clarify the focus of your study
• Point out the value of your research
• Specify your specific research aims and objectives

  2. The background section

  One of the main purposes of the background section is to ease the reader into the topic. It is generally considered inappropriate to simply state the context and focus of your study and what led you to pursue this line of research. The reader needs to know why your research is worth doing. You can do this successfully by identifying the gap in the research and the problem that needs addressing. One common mistake made by students is to justify their research by stating that the topic is interesting to them. While this is certainly an important element to any research project, and to the sanity of the researcher, the writing in the dissertation needs to go beyond ‘interesting’ to why there is a particular need for this research. This can be done by providing a background section. You are going to want to begin outlining your background section by identifying crucial pieces of your topic that the reader needs to know from the outset. A good starting point might be to write down a list of the top 5-7 readings/authors that you found most influential (and as demonstrated in your literature review. Once you have identified these, write some brief notes as to why they were so influential and how they fit together in relation to your overall topic.

  3. The research focus

  The research focus does two things: it provides information on the research focus (obviously) and also the rationale for your study. It is essential that you are able to clarify the area(s) you intend to research and you must explain why you have done this research in the first place. One key point to remember is that your research focus must link to the background information that you have provided above. While you might write the sections on different days or even different months, it all has to look like one continuous flow. Make sure that you employ transitional phrases to ensure that the reader knows how the sections are linked to each other.
  The research focus leads into the value, aims and objectives of your research, so you might want to think of it as the tie between what has already been done and the direction your research is going. Again, you want to ease the reader into your topic, so stating something like “my research focus is…” in the first line of your section might come across overly harsh. Instead, you might consider introducing the main focus, explaining why research in your area is important, and the overall importance of the research field. This should set you up well to present your aims and objectives.
  
  
  4. There are four things you need to remember when creating research objectives. These are:
  • Appropriateness (each objective is clearly related to what you want to study)
  • Distinctness (each objective is focused and incrementally assists in achieving the overall research aim)
  • Clarity (each objective avoids ambiguity)
  • Being achievable (each objective is realistic and can be completed within a reasonable timescale)

    5. The Conclusion

    Your dissertation conclusion will do one of two things. It may fill you with joy, because it signals that you are almost done. Or it may be a particularly challenging test of your mental strength, because by this point in the dissertation you are likely exhausted. It is your job at this point to make one last push to the finish to create a cohesive and organised final chapter. If your concluding chapter is unstructured or some sort of ill-disciplined rambling, the person marking your work might be left with the impression that you lacked the appropriate skills for writing or that you lost interest in your own work.
    To avoid these pitfalls, you will need to know what is expected of you and what you need to include in your successful dissertation conclusion chapter.
    There are three parts (at a minimum) that need to exist within your dissertation conclusion. These include:
    • Research objectives – a summary of your findings and the resulting conclusions
    • Recommendations
    • Contributions to knowledge

A Guide on how to Tenth Line Court Legal Documents ..COURT OF APPEAL PRACTICE DIRECTION - CIVIL APPEALS AND APPLICATIONS

 COURT OF APPEAL PRACTICE DIRECTION - CIVIL APPEALS AND APPLICATIONS

This Practice Direction is issued pursuant to Section 3A and 3B of the Appellate Jurisdiction Act and to assist litigants and advocates to comply with the provisions of the Court of Appeal Rules, 2010.
This Practice Direction relates to Civil Appeals.
References to “the Rules” or a particular rule in this Practice Direction are references to the Court of Appeal Rules, 2010.
References to action required to be taken by “advocates” shall also apply to litigants in person.

Documents filed in the Court of Appeal:

1. All documents filed in the Court of Appeal shall comply with rule 13.  
2. A4 paper shall be used in place of foolscap.
3. Care must be taken to see that all documents filed are legible. Where the original document which has been produced in the court appealed from is of poor quality then a typed version of the original should be included in the application, affidavit  or Record of Appeal immediately after the copy of the original.
4. All pages shall be numbered in the top right hand corner. Every tenth line of every document shall be numbered in the right hand margin. Advocates shall include in all applications, affidavits and Records of Appeal their e-mail and mobile telephone numbers to facilitate communication by the Registry. 

pictorial guide is being prepared ....