PART II CONTD- THE PROBLEM OF THE PRIORITY RULE UNDER THE NORMAL LAW
S495 applicable ONLY in context of winding up proceeding.
S494 fails to take cognizance of the peculiar nature of capital market and interests of investors and the relationship of account holders with issuer companies they have invested in, Capital Market Operators (CMO) and trading on an electronic and intermediated environment (CSCS)
Outcome of Normal Law:
by failing to recognize the true beneficial owners of the share certificates that stock broking firms hold (please see S86 CAMA), the Certificated system created under CAMA allows the absurd situation where investors are positioned at the bottom of the pyramid of priority.
Defeats imperative of special protection of capital market leading to the repeal of Part XVII of CAMA by S263 (1) (d) of the then ISA 1999 as regards dealings in public companies securities
Special nature of capital market and SEC ignored
Integrity of capital market and protection of investors undermined
Hazardous resort to exceptional provisions to S86 of CAMA and equity rules (Equity looks at what ought to be done as done) to provide basic protection to this special breed of investors.