上海交通大学：《外国法专题（比较公司法）》课程教学资源（Course Materials）Company Law II_Company Law II Lecture 5：Fundraising by Public Issue Part 2

COMPANY LAW II Wk 5 Fundraising by Public Issue part 2

COMPANY LAW II Wk 5 Fundraising by Public Issue - part 2

Misstatements causation and intention ● Causation:false or misleading statement must have caused loss:Edgington v Fitzmaurice. -cfco540 and SF05108,and55277,281. Third party reliance: Peek v Gurney Al Nakib Investments Andrews v Mockford Possfund Custodian v Diamond -cfC0540 and SF05108,and55277,281

Misstatements - causation and intention • Causation: false or misleading statement must have caused loss: Edgington v Fitzmaurice. - Cf co 540 and SFO 5 108, and 55277,281 . • Third party reliance: - Peek v Gurney - AI Nakib Investments - Andrews v Mockford - Possfund Custodian v Diamond - Cf CO 540 and SFO 5 108, and 55277,281

Fraudulent misstatements 。 Civil liability for compensation: Tort of deceit;MO s 3(1). -C0s40,SF0ss108,277and281. 。Criminal liability: CO s 40A-untrue statements in prospectus where no reasonable grounds for belief. SFO s 107 -fraudulent or reckless misrepresentations. SFO s 298-fraudulent or reckless disclosures of false or misleading information.[SFO pt XIV] Theft Ordinance(Cap 210)s 16A-fraud. Common law:conspiracy to defraud

Fraudulent misstatements • Civil liability for compensation: - Tort of deceit; MO s 3(1). - CO s 40, SFO ss 108, 277 and 281 . • Criminal liability: - CO s 40A - untrue statements in prospectus where no reasonable grounds for belief. - SFO s 107 - fraudulent or reckless misrepresentations. - SFO s 298 - fraudulent or reckless disclosures of false or misleading information. [SFO pt XIV] - Theft Ordinance (Cap 210) s 16A - fraud. - Common law: conspiracy to defraud

Fraudulent misstatements Proving fraud:Derry v Peek.Fraud is proved if: Person knows statement to be false; Person did not believe in the truth of the statement;or Person was reckless as to the truth or falsity of the statement. Cf MOs 3(1),CO s 40A,SFO ss 107,298

Fraudulent misstatements • Proving fraud: Derry v Peek. Fraud is proved if: - Person knows statement to be false; - Person did not believe in the truth of the statement; or - Person was reckless as to the truth or falsity of the statement. • Cf MO s 3(1), CO s 40A, SFO ss 107, 298

Typical process for public issues Must be public company:see s 29. Private co converting to public:see s 30. ·Appoint sponsor. Sponsor to engage in due diligence and drafting of the prospectus Apply for listing on stock exchange;submit prospectus(listing document)to stock exchange for review:see LR Ch 9. At the same time,lead underwriter (usually the brokerage arm of the sponsor)will begin process of syndication (obtaining other underwriters ) Following approval by the stock exchange,register prospectus with Companies Registry:s 38D. Issue application forms and prospectuses Open and close subscription lists Allot and issue the shares

Typical process for public issues • Must be public company: see s 29. - Private co converting to public: see s 30 . • Appoint sponsor . • Sponsor to engage in due diligence and drafting of the prospectus . • Apply for listing on stock exchange; submit prospectus (listing • document) to stock exchange for review: see LR Ch 9 . • At the same time, lead underwriter (usually the brokerage arm of the sponsor) will begin process of syndication (obtaining other underwriters ) . • Following approval by the stock exchange, register prospectus with Companies Registry: s 38D . • Issue application forms and prospectuses . • Open and close subscription lists . • Allot and issue the shares

Advertising restrictions Restrictions under s 38B. Exceptions:see s 388(2)and 19th Schedule. Restrictions arising from definition of prospectus:ss 2,38(1),(1A),380. Restrictions under SFO ss 103,105. Restrictions under Stock Exchange listing rules, rule 9.08

Advertising restrictions • Restrictions under s 38B. - Exceptions: see s 388(2) and 19th Schedule . • Restrictions arising from definition of prospectus: ss 2, 38(1), (1A), 380 . • Restrictions under SFO ss 103, 105 . • Restrictions under Stock Exchange listing rules, rule 9.08

Sales in secondary market Prospectus provisions prima facie do not apply to sales of shares . But anti-avoidance provision in s 41 prohibits the offer of shares for the purposes of on-sale

Sales in secondary market • Prospectus provisions prima facie do not apply to sales of shares . • But anti-avoidance provision in s 41 : prohibits the offer of shares for the purposes of on-sale