What is a prospectus? Indicate the correct response. A prospectus can be produced in the form of an Offer information Statement; this is a shorter version of a prospectus and contains less detail A prospectus is the document issued after a party takes up the offer of a security from a company; it is the contractual arrangement between the parties for the repayment of the money borrowed A prospectus is required for any offer of a security between $1m and $10m : a prospectus for amounts over $10m is optional on a company since the subscribers are considered to be sophisticated investors A prospectus is a disclosing document that is required for an offer of securities, which raises more than $10m; it contains considerable detail about the security to be offered to the public What is considered to be misleading behaviour in relation to a disclosing document? Misleading behaviour does not include mistakes or omissions What constitutes misleading behaviour is specifically listed in the CA; any behaviour not on the list will not constitute misleading behaviour Misleading behaviour relates to any wrong statements contained in the disclosing document, and any omissions or non-disclosure of new circumstances, which affect the veracity of the disclosing document Misleading behaviour refers to behaviour which deliberately misleads potential investors Membership of a company carries particular common law and statutory rights. Which is correct? The right to enforce the statutory contract means they can ensure all contracts held by a company can be enforced by the company The right of members to vote at a meeting at an AGM is determined by directors Members must first seek permission from a court to undertake an action for oppression Members have the right to see the winding up of their company Which companies are required to hold an Annual General Meeting (AGM)? Which is the correct answer? Only proprietary companies must hold an AGM Only public companies must hold an AGM All companies must hold an AGM and appropriate notice of the meeting must be given to the members Only companies directed by ASIC must hold an AGM What is the significance of a party being determined to be a shadow director? Shadow directors have not been appointed and therefore cannot be liable for any offences under the CA A shadow director will be disqualified from their position if they are found to have exerted influence on the board of director A shadow director will have the same liability as a director who has been appropriately appointed Shadow directors are not permitted to manage a company How are directors appointed? Directors must consent to their appointment but the appointment does not need to be registered with ASIC Directors can only be appointed by a member's meeting after the company is formed Directors are appointed by members except if the constitution states otherwise. The appointment needs then to be approved by ASIC Directors may be appointed on the registration of the company with their consent