Banking and finance law
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RESEARCH PAPER 2
Metway Mining Company Ltd (Metway) has prepared a prospectus in February 2000 and their directors are Igor, Marco, Selima and Kimberley. It can be established that Metway is providing a financial service as they are dealing in a financial product . Such a conduct as issuing financial products to the public is considered to be is part of dealing as per S766C (1) (b). It is conclusive that Metway is dealing in a financial product.
In preparing a prospectus the issuer will generally undertake a formal process of collecting, reviewing and verifying the information to be included in the prospectus with due diligence. The functions of due diligence are to determined the contents of the prospectus, to avoid misleading and deceptive statement in and omissions from, the prospectus and to impose liability or defences on the issuer.
Offers of securities require disclosure and in which at least one type of disclosure that will be applicable to it . Given the circumstances that Metway is a new company which requires IPO, the securities is then known as primary issue; since shares that is being issued is known as a public share float therefore the company it requires a full disclosure in the prospectus being issued unlike secondary issues.
General disclosure and statutory enforcement provides that a prospectus must contain all information including relevant information that investors and their professional advisors would reasonably require in order to make an inform assessment in respect to financial products. As relevant information cannot be conclusive, the test for disclosure of anything that is relevant would be known or ought to be known to a person under s710 which these persons can include directors, underwriters or experts who have made statements included in the prospectus and in this case are the directors of Metway, geologist and Metway accountant ...