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The role of lawyers and duties they perform in the securities sector

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When a company intends to go public, a reliable lawyer authorised by the SERC will be needed. PHOTO SUPPLIED

The role of lawyers and duties they perform in the securities sector

According to Cambodia’s Law on the Bar, “the legal profession is an independent and autonomous profession involved in the serving of justice”, with lawyers fulfilling four main roles – representing clients; defending clients; advising clients; and preparing legal documents.

Why is it necessary in the securities sector to have a lawyer?

The securities sector in Cambodia has developed steadily since its establishment.

Seven companies have listed equity securities on the Main Board, and two on the Growth Board, while of the eight companies having listed bonds on the exchange, three have reached maturity.

The Securities and Exchange Regulator of Cambodia (SERC) has received many proposals for bonds and stocks, with applications in the process of going public including the issuance of green bonds.

Going public requires the support of a working group known as an “IPO Team”, comprising entities such as securities underwriters, law firms and audit companies.

A lawyer’s core responsibility to the company going public is performing legal obligations, which include providing legal advice, reviewing legal compliance and preparing documents related to due diligence.

And a lawyer plays an important role even after listing.

It is common for lawyers to be actively involved in providing legal services to other key players, such as securities brokers, securities underwriters, financial advisory firms, investment advisory firms, central counterparties and derivatives brokers.

They also work with fund management companies, trustees, securities registrar agents, transfer agents and paying agents, bondholder representatives, credit rating agencies, decision custodian agents, valuation companies and audit firms.

SERC has to date provided accreditation to 15 law firms and 31 qualified lawyers to provide legal services in the securities sector.

This accreditation is intended to create greater choice for companies in the issuance process and those providing services or conducting business in the securities sector.

When is a lawyer most important?

With lawyers making significant contributions to the securities sector both before a initial public offering (IPO) and after it is complete, the two stages will be looked at to better understand the roles they play.

Pre-IPO stage

When a company intends to go public, it will be necessary to choose a reliable lawyer authorised by SERC to provide legal advice and prepare due diligence reports.

The due diligence reports prepared by the lawyer are especially important as they confirm that the company intends to meet all the requirements of the applicable laws and regulations.

In addition, a lawyer is also responsible for assisting the company in preparing various legal documents, including the company’s articles of incorporation, agreements, policies, code of ethics and its internal rules.

Post-IPO stage

Even after the company is listed, the lawyer can still play an active role, consulting and preparing legal documents as required by the company.

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And should a company be involved in a dispute, the lawyer will represent their client in the court or adjudication process.

In the case of dispute in the securities sector, investors can choose to file a complaint to the court or to the SERC.

In the adjudication process, the lawyer can serve as a representative of the company when dealing with the SERC, such as acting as an arbitrator or administrator.

SERC officials appointed by the director-general act as mediators, supporting disputing parties in negotiations and proposing options, and encouraging them to reach an agreement.

In cases of suspected criminal behaviour or misconduct, the investigation process can be conducted by the SERC.

The lawyer is the defender of the company they represent in any investigation process conducted by SERC officials.

To ensure trust for listed companies as clients, a lawyer has an obligation to comply with the applicable laws and regulations, and maintain confidentiality in the securities sector.

Lawyers are under the obligation to preserve the confidentiality of information provided by their clients to avoid professional misconduct.

The public can search for the law firms accredited and authorised by the SERC on the SERC website or via the QR Code.

Reference: Law on the Bar of Cambodia.

Prepared by: Securities and Exchange Regulator of Cambodia, Securities Issuances Supervision Department.

Email: [email protected].

Phone: 023 885 611.


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