In what circumstances will a company be liable for misrepresentation in its initial public offering?
Ontario, Canada
The following excerpt is from Allen v. Aspen Group Resources Corporation, 2009 CanLII 67668 (ON SC):
The issue was also raised in Kerr v. Danier Leather Inc. (2001), 14 C.P.C. (5th) 293, [2001] O.J. No. 4000 (Sup. Ct.). In that case, Cumming J. certified a class action involving a claim under s. 130 of the Securities Act for misrepresentation in an initial public offering through a prospectus. The prospectus disclosed the company’s financial condition and operating results for the first three quarters of its fiscal year, to March 29, 1998. The public offering closed in May, 1998 and it was alleged that the prospectus made misrepresentations concerning the forecast of revenues and earnings for the fiscal year ended June 27, 1998 and for the fourth quarter of 1998. Sales in May and June of 1998 did not meet the forecast, allegedly due to a prolonged period of unseasonably warm weather. The plaintiff alleged that the company failed to disclose that its actual sales were substantially under the forecasted projections and that it should have known that its estimates for the entire fiscal year would be less than forecast.
"The most advanced legal research software ever built."
The above passage should not be considered legal advice. Reliable answers to complex legal questions require comprehensive research memos. To learn more visit www.alexi.com.
Other Questions
In what circumstances will a court order that a dividend be paid to the shareholders of a company that is not a publicly listed company? (Ontario, Canada)
Can a shareholder of a publicly listed company who has agreed to a lockup agreement with the majority shareholder of the company in order to prevent the company from being taken over? (Ontario, Canada)
In what circumstances will a landlord be held liable for failing to protect the public from the danger to which the public has been exposed? (Ontario, Canada)
Can a director of a company be held liable for oppression if the director of the company acts in bad faith? (Ontario, Canada)
Can a company be liable for misrepresentation in a prospectus for funds distributed on the primary market? (Ontario, Canada)
In what circumstances will a shareholder of a company be able to bring a motion for personal injury against the company’s majority shareholder? (Ontario, Canada)
Can a party who has rejected an offer or responded with a counter offer to accept the original offer unless it has been withdrawn? (Ontario, Canada)
In what circumstances have costs been denied or substantially reduced because of the unsuccessful party's financial circumstances? (Ontario, Canada)
Does a material change in circumstances under what circumstances would have changed the terms of an order under which an order was made? (Ontario, Canada)
When a director is on the board of each of two contracting companies, each of which is a majority shareholder in each of the companies, can the director of both be bound by the inflexible rule of equity? (Ontario, Canada)
