LAW AND PRACTICE OF FINANCE

Course Objectives: a) Introduce students to the legal and regulatory framework of the financial industry

b) Give the students a theoretical grounding so that they are able to understand the new financial
products, decipher the legal underpinnings of the product and be able to interpret and advise on the
fast changing regulatory directives with regard to the financial products and players.

Course Outline:

1) Finance and its role and importance in economy, features distinguishing a financial asset from
other asset classes, importance and necessity of regulating financial sector and a brief overview
of the regulatory structure.

2) Banks and their role in the financial system, core banking and universal banking, banks as risk
creators in the monetary system, regulatory techniques of mitigating risks posed by banks
including systemic risks.

3) Financing options: an overview of options, types of share finance, types of debt finance, ,
specialized finance, relationship between equity and debt.

4) Bank investments and the risks inherent in them, risk mitigation techniques adopted by banks.

5) Credit and security: creditor protection – contractual and proprietary, importance of security,
definition of security interest, its attachment and perfection, floating charges, determination of
priority amongst security interests.

6) Consortium finance: types of credit facilities, important terms of syndicate finance, loan
participation and sub participation.

7) Title finance: forms, objectives, legal disadvantages, finance leases and their terms, repo
agreements and their terms, bill discounting, forfaiting and factoring.

8) Project finance: structure, risks, concessions and contracts, sponsor support, financial
agreements, security trustee.

9) Loan subordination: meaning and purposes, methods, terms of subordination agreements.

10) Search for liquidity: securitization, its nature, objectives, structures, credit enhancement
techniques, true sale requirements.

11) Bond/Debenture issuance: comparison with syndicate loans, terms types, debenture trustee

12) Bank accommodation: accommodation credit, letters of credit, bank guarantees, credit
derivatives, comfort letters

13) Derivatives: introduction, future contracts, options, swaps, credit derivatives, documentation.

14) Credit rating, legal opinions and their terms and outlines

15) Payment and securities clearing systems, set off and netting, counterclaim

16) Enforcement action by creditors.

Books to be referred to
 LAW AND PRACTICE OF FINANCE

1) Corporate Finance Law: Principles and Policy- by Louise Gullifer and Jennifer Payne, 2 nd
Edition

2) Law and Practice of International Finance Series (2 nd Edition), Volume 2- By Phillip Wood-
Comparative Law of Security Interests and Title Finance

3) Law and Practice of International Finance Series (2 nd Edition), Volume 3- by Phillip Wood-
International Loans, Bonds, Guarantees, Legal Opinions

4) Law and Practice of International Finance Series (2 nd Edition), Volume 4- by Phillip Wood-
Set-off and Netting, Derivatives, Clearing Systems

5) Law and Practice of International Finance Series (2 nd Edition), Volume 5- by Phillip Wood-
Project Finance, Securitisations, Subordinated Debt

6) Law and Practice of International Finance Series (2 nd Edition), Volume 7- by Phillip Wood-
Regulation of International Finance

7) Goode on Legal Problems of Credit and Security, 5 th Edition- Edited by Louise Gullifer

Evaluation Methodology: One project of 25 marks, out of which 15 for the written component and 10 for
the presentation and class assignments aggregating 25 marks