Councils in Zambia suffer from chronic financial distress. Issuance of public debt securities could therefore prove a valuable source of corporate finance that could be applied to capital projects, and possible re-investment of returns on the investment. In this respect, the availability collateral to secure loan obligations, an effective and efficient mechanism for determining priority of competing collateral interests, enforceability of security interests against the collateral, profit potential, goodwill, cash inflows and credit ratings of councils and their securities are some of the factors affecting the success of the public issue of public debt securities by councils. The study assesses the legal, regulatory and institutional framework for the public distribution of securities within Zambia and across international borders so as to establish whether or not it provides adequate incentives for the growth of corporate debt financing by councils in Zambia. The study employs the doctrinal approach to examining the effectiveness of legal and regulatory rules, and institutions. The main findings of the study were that: (a) while the legal, regulatory and institutional framework permits issue of public debt securities, it (i) does not recognize them as listable on securities exchanges, (ii) does not permit issue of public debt securities in dematerialized form, (iii) does not recognize public debt securities as distributable under prospectuses in Zambia, (b) the poor financial position and performance of councils is likely to affect credit ratings of councils and saleability of their public debt securities, (c) there are restrictions on judicial enforcement of loan obligations of councils, and (d) there are no rules for determining priority of competing security interests in the council general fund. As a possible way of remedying these shortcomings in the law, the article makes necessary recommendations for law reform.