Insider trading in mergers and acquisitions in South Africa

Abstract

Evidence suggests that insider trading in mergers and acquisitions is common in South Africa. However, South Africa does not have specific legislation that deals directly with insider trading in mergers and acquisitions. Therefore, this study considers various legislation and regulations that have a bearing on insider trading in mergers and acquisitions in South Africa. The study examines the regulatory framework regarding insider trading in mergers and acquisitions under the Financial Markets Act, the Companies Act, the Companies Regulations, and the Johannesburg Stock Exchange Listing Requirements. Proceeding from the standpoint that insider trading is prevalent, this study aims to review the regulation of insider trading and mergers and acquisitions in South Africa. The study also highlights the strengths and weaknesses of the legislation dealing with insider trading in South Africa. Additionally, the paper advocates for an enhanced legal framework for dealing with insider trading to achieve market integrity and efficiency in mergers and acquisitions. It also seeks to promote the transparency and integrity of the parties involved in mergers and acquisitions and to raise awareness to market participants that market abuse practices such as insider trading will expose innocent investors to risks such as the rise and fall of share prices in affected transactions.