A public company issues new shares must prepare a prospectus which must be registered with the Securities Commission Malaysia. The board of directors, headed by Godin, approved the prospectus to be issued on a rights issue for 10 million shares. It is later found that the prospectus contains information that is misleading and there is a material omission of information. Who shall be liable for the misleading information and omission? Justify your answer.
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A public company issues new shares must prepare a prospectus which must be registered with the Securities Commission Malaysia. The board of directors, headed by Godin, approved the prospectus to be issued on a rights issue for 10 million shares. It is later found that the prospectus contains information that is misleading and there is a material omission of information.
Who shall be liable for the misleading information and omission? Justify your answer.
(Must be in essay form, 800 words)
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- You are the president of Duke Company and are leading the company through the process of incorporation. The company has determined that common stock shares will be issued, but several key executives at Duke are not quite sure they understand the preemptive right feature associated with common shares. Prepare a memo to your executive team outlining the meaning of this right.Monicker Co. engaged the audit firm of Gasner & Gasner to audit its financial statements that Monicker was going to use in connection with a public offering of its securities. Monicker's stock regularly trades on the NASDAQ. The audit was completed and the auditor issued an unqualified opinion on the financial statements, which Monicker submitted to the SEC along with the registration statement. Three hundred thousand shares of Monicker common stock were sold to the public at $13.50 per share. Eight months later, the stock fell to $2 per share when it was disclosed that several large loans to two "paper" companies owned by one of the directors were worthless. The loans were secured by the stock of the borrowing corporation and by Monicker stock owned by the director. These facts were not disclosed in the financial statements. The director and the two corporations are insolvent. Considering these facts, indicate whether each of the following statements is true or false, and briefly…Monicker Co. engaged the audit firm of Gasner & Gasner to audit its financial statements that Monicker was going to use in connection with a public offering of its securities. Monicker's stock regularly trades on the NASDAQ. The audit was completed and the auditor issued an unqualified opinion on the financial statements, which Monicker submitted to the SEC along with the registration statement. Three hundred thousand shares of Monicker common stock were sold to the public at $13.50 per share. Eight months later, the stock fell to $2 per share when it was disclosed that several large loans to two "paper" companies owned by one of the directors were worthless. The loans were secured by the stock of the borrowing corporation and by Monicker stock owned by the director. These facts were not disclosed in the financial statements. The director and the two corporations are insolvent. Considering these facts, indicate whether each of the following statements is true or false, and briefly…
- You were engage by Blank Space Corporation, a publicly held company whose shares are traded on the Philippine Stock Exchange, to conduct an audit of its financial statements. You were told by the company’s controller that there were numerous equity transactions that took place in 2021. The shareholders’ equity accounts at December 31, 2020 had the following balances: Share capital- Preference, P100 par value, 6 % cumulative; 30,000 shares authorized; 18,000 shares issued and outstanding P1,800,000Share capital-Ordinary, P1 par value, 1,800,000 share authorized 1,200,000 shares issued and outstanding 1,200,000Share premium 2,400,000Retained Earnings…Kulikowski Inc., a client, is considering the authorization of a 10% common stock dividend to common stockholders. The financial vice president of Kulikowski wishes to discuss the accounting implications of such an authorization with you before the next meeting of the board of directors. Instructions a. The first topic the vice president wishes to discuss is the nature of the stock dividend to the recipient. Discuss the case against considering the stock dividend as income to the recipient. b. The other topic for discussion is the propriety of issuing the stock dividend to all “stockholders of record” or to “stockholders of record exclusive of shares held in the name of the corporation as treasury stock.” Discuss the case against issuing stock dividends on treasury shares.On 1 April 2019, Toronto Berhad was incorporated and a prospectus was issued inviting applications for 100,000 shares, at an issue price of RM10, payable RM5 on application, RM2.50 on allotment and RM1.25 on each of two calls to be made at intervals of 4 months after the date of allotment. By 30 April, applications were received for 120,000 shares. On 3 May, the directors allotted 100,000 ordinary shares to the applicants in proportion to the number of shares for which applications had been made. The surplus application money was offset against the amount payable on allotment. The balance of the allotment money was received by 10 May. Legal costs of forming the company were RM1,300 and were paid on 11 May. Share issue costs of RM800 were also paid on the same date. The two calls were made on the dates stated in the prospectus, but the holders of 10,000 shares did not pay either call. In addition, a holder of another 5,000 shares did not pay the second call. On 10 March 2020, as…
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- The business becomes a publicly listed company -RMJ KidsRUs Ldwith 1,500 outstanding shares.The company decides to undertake another share issue.RMJ KidsRUs Ltd released a prospectus seeking 3,000 shares valued at $9 each. The prospectus required investors to pay $4 on application, S3 on allotment and $2 on callThe deadline for applications was 24 January. By this date, applications were received for 3,300 shares. In dealing with this over-subscription, the company decided to refund the excess application money back to the unsuccessful applicants.The shares were allotted on 20 February with payment received on 17 March. A call was made on 3 April and the call money was received on23 April.On 1 May, RMJ KidsRUs Ltd announces a cash dividend of $0.90 per share to be distributed on 22 May to shareholders on record at 19 May Journalise all the transactions represented by the events described above, including all relevant datesABC Company, a restaurant that serves Thailand-style fried chicken, was authorized by the SEC to issue 50,000 shares. Of that number, they were able to issue 27,000 shares. Integrity owns 9,180 shares, while Honesty owns 6,750 shares. Both of them were not given pre-emptive rights. ABC Company issued 15,300 additional shares.After the new issuance, what is the new percentage ownership by Honesty (round off your answer to two decimal places)?The company is desirous of comparing serval financial transactions and possible outcomes to assist in guiding its decision-making process. It is assumed that the company will be formed on January 1, 2021 and registered as Osbourne Corporation. The company’s charter will authorize 1,000,000 shares of common stock and 400,000, $100 par value, 5% cumulative preferred stock. Issued 65,000 shares of common stock. Stock has par value of 0.40 per share and was issued at $30 per share Issued 10,000 shares of preferred stock at par value as payment in exchange for legal services Exchanged 200,000 shares of common stock for land with an appraised value of $ 500,000 and a building with an appraised value of $700,000. Earned Net income $750,000. Paid dividends to preferred shareholders as well as $2 per share to common stockholders. Using the info above and as a guide: Prepare Osbourne Corporation Stockholders equity section of the balance sheet at December 31, 2021.…