In order to obtain the funds necessary to expand its business Growth Ltd is to make a $M20 share issue. Advise the directors of Growth Ltd over the following matters.
Can the funds be raised from existing members or anyone else without a prospectus? Will the directors be safe from prosecution if they provide to investors in a prospectus everything they know that is relevant about the investment? If the company issues a prospectus and the directors then become aware that there is a false and misleading statement in it, what alternatives are available to them under the CA? Does the CA provide any protection for directors where funds are raised under a prospectus that contains a misleading statement?
Donald is a director of Developer Ltd. Donald’s wife Daisy has owned a vacant block of land in Disney Street for many years.
Donald attends a board of directors’ meeting of Developer Ltd. He learns that the company is