CAVENDISH UNIVERSITY FACULTY OF LAW CRITICAL ANALYSIS OF WHETHER EMPLOYMENY LAWS LEGALLY PROTECT EMPLOYEE’S JOB SECURITY DURING CORPORATE MERGERS AND ACQUISITIONS PARICULRY IN MALAWIAN PERSEPECTIVE. SUBMITTED BY KENNEDY RANKEN NKHOMA Project paper submitted to the University of Cavendish (Zambia) in partial fulfillment of the award of a Bachelor of Laws (Honours’) Degree. i DECLARATION I, Kennedy Ranken Nkhoma, declare that the work presented in this dissertation is original. It has never been presented to any other university or institution for an award of any degree whatsoever. Both primary sources and secondary sources used have been duly acknowledged. It is in this regard that I declare that this work is originally mine. Author’s Signature……………………………………………………………………………… Dated this………………………….Day of………………………………………2019. This dissertation is submitted to the University of Cavendish (Zambia) in partial fulfillment of the award of a Bachelor of Laws (Honours) Degree with approval of my supervisor. Supervisor’s Signature…………………………………………………………………………… MR VICTOR MWAPE Dated this……………………………Day of…………………………………………2019. ii DEDICATION To My wife YAMIKANI NKHOMA For taking care of our little children TYRESE NKHOMA AND TYREE NKHOMA whenever I was busy with studies iii ACKNOWLEDGEMENTS First and foremost, I thank God, the Almighty, for the gift of life and good health that has enabled me to reach this far and write this dissertation. I also wish to acknowledge with thanks and gratitude the guidance and assistance of my supervisor, Mr. Victor Mwape, in the development of this dissertation. His tireless effort and his vast knowledge on the subject tremendously helped to shape this piece of work. I am, however, personally accountable for all shortfalls and mistakes in argument, analysis, presentation and otherwise. Last, but by no means least, I would like express my profound gratitude to my lovely wife, Yamikani Nkhoma for his awesome immeasurable love, encouragement and support throughout the ordeal of being student; and my children: Tyrese Nkhoma and Tyree Nkhoma for perseverance and tolerance way beyond their ages. iv Contents DECLARATION ........................................................................................................................................... i DEDICATION ............................................................................................................................................. iii ACKNOWLEDGEMENTS ......................................................................................................................... iv LIST OF CASES.......................................................................................................................................... ix LIST OF STATUTES ................................................................................................................................... x LIST OF ABBREVIATIONS ...................................................................................................................... xi ABSTRACT ................................................................................................................................................ xii CHAPTER ONE INTRODUCTION .......................................................................................................... 1 1.0 BACKGROUND ................................................................................................................................ 1 1.1 STATEMENT OF THE PROBLEM .................................................................................................. 3 1.2 OBJECTIVES ..................................................................................................................................... 3 1.2.1 Main objective ............................................................................................................................. 3 1.2.2 Specific objectives ....................................................................................................................... 3 1.3 QUESTIONS ...................................................................................................................................... 4 1.3.1 Main question ............................................................................................................................... 4 1.3.2 Specific questions ........................................................................................................................ 4 1.4 HYPOTHESIS. ................................................................................................................................... 4 1.5 SCOPE OF STUDY ............................................................................................................................ 4 1.6 SIGNIFICANCE AND JUSTIFICATION OF THE STUDY ............................................................ 4 1.7 LITERATURE REVIEW ................................................................................................................... 5 1.8 METHODOLOGY ............................................................................................................................. 8 1.8.1 Methods of research ..................................................................................................................... 8 1.8.2. Data collection methods .............................................................................................................. 9 1.8.3. Data analysis ............................................................................................................................... 9 1.8.4. Ethical consideration ................................................................................................................. 10 1.8.5. Reliability .................................................................................................................................. 10 1.8.6. Limitations ................................................................................................................................ 11 1.9 CONCLUSION ................................................................................................................................. 11 CHAPTER TWO THE FORMALIZATION OF CORPORATE MERGERS AND ACQUISITIONS: CONCEPTS, FUNDAMENTAL PRINCIPLES AND LEGAL THEORIES ............................................ 12 v 2.0 INTRODUCTION ............................................................................................................................ 12 2.1 CONCEPTS, TYPES OF MERGERS. ACQUITISTIONS AND JOB SECURITY ....................... 12 2.1.1 CONCEPTS ............................................................................................................................... 12 2.1.2 MERGERS ................................................................................................................................. 13 2.1.3 TYPES OF MERGERS ................................................................................................................. 14 1. Horizontal merger ........................................................................................................................... 14 2. Vertical merger ............................................................................................................................... 15 3. Conglomerate merger ...................................................................................................................... 16 2.1.4 ACQUISITIONS ............................................................................................................................ 16 2.1.5 TYPES OF ACQUISITIONS ........................................................................................................ 17 1. Asset acquisition ............................................................................................................................. 17 2. Stock acquisition ............................................................................................................................. 18 2.1.6 DEFINITIONS OF JOB SECURITY ............................................................................................ 18 2.1.7 TYPES OF JOB SECURITY ......................................................................................................... 19 1. Agreed – Upon Term ...................................................................................................................... 19 2. Minimum payout ............................................................................................................................. 19 3. Minimum notice .............................................................................................................................. 20 4. Continued Perception of Employment ............................................................................................ 20 2.2 FUNDAMENTAL PRINCIPLES, STEPS OF FORMALISING MERGERS AND ACQUISITIONS AND THE LEGAL THEORIES THAT SUPPORT THE STUDY ........................... 20 2.2.1 FUNDAMENTAL PRINCIPLES .................................................................................................. 20 2.2.2 THE PROCESS OF FORMALISING MEGRERS AND ACQUISITONS .................................. 21 1. Business Valuation .......................................................................................................................... 21 2. Proposal phase ...............................................................................................................................