VENDOR BEWARE: THE ISSUE AND SALE OF SECURITIES WITHOUT A PROSPECTUS UNDER THE SECURITIES ACT, 1978 (ONTARIO)
AbstractThis article discusses the implications of The Securities Act 1978, which virtually adopted the “closed system” recommendations of the Merger Report, with its shift from the registration of securities to the registration of issuers. It reviews the circumstances that make filing a prospectus under the Act necessary, and outlines classes of securities exempted from filing requirements. It reviews conditions for sale to the investing public where the initial issuance was given without prospectus disclosure, and surveys the rights of controlling persons to trade their securities. It concludes that changes to the fundamental principles of issue and sale of securities into the public trading market are substantive, and advises caution in this approach.
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