Commercial and Corporation Law Proposal Data Report

Questions: 1. Provide a summary, in your own words, of Corporations Act s708 in relation to disclosure documents. Why in your opinion would a disclosure document not be required in the circumstances outlined under s708. Response limited to 40 lines. 2. Provide details of what the general and specific content requirements are for a prospectus. Also provide details of what defences preparers of prospectuses may be able to utilise in relation to defective content. 3. Provide details of what insider trading is. Why is it prohibited? What is inside information? What are the exemptions? 4. Provide a summary (in your own words) of the takeover process, include details of parties, documents and timeframes. Answers: 1. Under section 708 of the Corporations Act 2001 certain exceptions have been granted to the corporations in relation to the utilization of a disclosure document at the time of issuing or selling securities in relation to some kinds of investors. Disclosure Document in the section could be defined as an registered disclosure document of ASIC like prospectus, product disclosure report or proposal data report. But after reading section 708 it could be concluded that: Private proposals of securities to those investors known to the corporation do not require revelation if some conditions were met; A proposal of securities to refined investors does not require revelation if some conditions were met; A proposal to specialized investors does not require revelation if some conditions were met; and Henceforth, with the residual prearranged excepted proposals of securities to certain kinds of investors if some conditions were met. However, it has been observed that this section does not allow a corporation to liberally promote its proposal to issue or sell securities. The only proposals that may be explicitly publicized (subject to some conditions approved by the Corporations Act) were Disclosure Documents wedged with ASIC and even also, publicity and promotion must deal with the pertinent sections of the Act. So, after going through this section it has been affirmed that an exceptional proposal does not need disclosure. But according to my viewpoint a disclosure document not be essential in the circumstances outlined under section 708 for two basic reasons such as: Where the investors were not observed to be in requirement of security; Where a special consideration was granted to corporations who wishes to raise small amounts of funds. 2. As per section 109 of the Act, Prospectus has been defined as a standard disclosure deed. The specific necessities in regard to the content of prospectuses were outlined in sub- section 710-716 of the Act. There have been a general revelation duty under section 710 which entails revelation of all data that investors and their counselors would rationally need and rationally anticipate to discover. Corporations were not provided with a check-list to pursue while making a prospectus, but must adapt the data to the professed requirements of the investors. A prospectus may usually define as a document that has been filed with ASIC under section 712. This was defined as a short form prospectus. Though under section 713, a prospectus for listed securities was only obligatory to comprise of the data about the dealing and other material data not previously revealed to the market. A proposal data statement could be utilized where the amount of money to be raised was less than $5 million. But as per the requirement of section 715, the disclosure obligation was restricted to the particular data. The general disclosure obligations do not pertain. A profile statement could only be utilized if ASIC permits. Such statements must include the data needed by section 714 and any other data required by ASIC. The makers of the prospectus could take strict liability as a defense, if they proof that they took sensible steps to make sure that the disclosure document or statement would not be imperfect. 3. Insider trading has been defined as the trading of the stocks or other securities of a public corporation such as bonds by the corporate insiders such as managers or executives of the corporation who has access to nonpublic data about the corporation. Such dealing has been usually limited and forbidden under law because it grants the insider people an unfair benefit that permits them to earn proceeds from data about a potential up and down tick in relation to a trading value of the corporation before other market players. Such types of dealings were monitored by the Securities and Exchange Commission (SEC). Such a authority has adopted regulations with regard to insider trading which would define it as any securities dealing which were made when an individual was incorporated in the business has non public, material data. As such data may be used by such professional in order to violate his or her obligation I order to preserve the secrecy of such skill b y utilizing it for financial gain. Insider information has been regarded as non-public information with regard to the plans or stipulations of a publicly traded corporation that could grant a financial benefit when used to purchase or sell shares of the stocks of the company. The exemptions in connection to lawful objective, performance of obligations and discharge of lawful duties remain indeterminate under the act of insider Trading. 4. Takeover has been defined as a procedure in which an acquirer takes over the authority or management of a target corporation by taking over the substantial quantity of shares or voting rights of such corporation. So, in order to take over a corporation there has been a specific procedure which must be kept in mind such as: A merchant banker must be appointed before making an public announcement of offer. Public announcement would be made to guarantee that the shareholder of the target corporation were aware if an exit chance provided to them. The revelations include: The proposal price, nuber of shares to be acquired; Identity of the acquirer; Objective of acquisition, etc. The acquirer was required to make the public announcement within 4 working days of the entering into a contract in order to acquire shares. Before the Public Announcement was made, the acquirer has to open an escrow account in the structure of cash placed with a listed commercial bank or bank pledge in relation of the Merchant Banker or in relation of satisfactory securities with proper margin with the Merchant Banker. The public announcement shall also specifically mention a date, which shall be the particular date for the object of shaping the names of the shareholders to whom the communication of proposal should be provided. Though such particular date shall not exceed more than the 13th day from the date on which public announcement was made.