chapter 11 part 4 Flashcards
what is a prospectus?
a detailed description of securities offered and of the issuing company. including history, management, risk and audited financial statements.
what is a material fact?
information that would have a significant effect on a stocks share price
explain the preliminary and final prospectus?
most provinces require a prospectus from the issuer and underwriters. the preliminary prospectus is also called a red herring prospectus as it has red writing to show it is not the final.
how long after the final prospectus is submitted do they have to be approved?
the waiting period is 90 days
what is a greensheet?
when the preliminary prospectus is created. a circular can be sent to the sales department highlighting the features of the new issue
what does it mean when an issue is blue skyed?
when the final prospectus is approved and the issue can be put on the market.
explain short form prospectuses?
used by senior reporting issuers who have made previous public distributions and are subject to continuous disclosure requirements of annual finances
because the company already has alot of the information that would be on a prospectus public
what is a bought deal underwriting?
when the underwriter buys shares for ipo and then sells them to the public.
what is a conventional underwriting?
when the underwriter distributes the shares for the company. the company only raises funds from shares sold.
what is after-market stabilization?
an agreement might be made between the lead dealer and the issuing company on the prospectus. When the Security is issued the underwriter might buy shares to support the price from falling below the initial offer price of the stock.
what is an over-allotment option?
The underwriter is allowed to sell up to 15% more shares than originally agreed upon and creates short position.
if the stocks falls below the IPO price the underwriter executes the short position buying back the shares which will support the price.
if the price rises the underwriter buys the 15% additional shares from the company to close out short position without incurring too much loss.
what are escrowed shares?
when a underwriter provides risk capital. escrowed shares can be issued as part of the deal. they are held by a third party and can only be sold under special conditions. to provide stability to the share price.
what is a capital pool company?
on the TSX venture a new company who does not have assets or revenue creates a IPO and with funds acquired from the IPO within the first 24 months buys a company with assets and revenue
who trades on the NEX forum?
Companies who have fallen below the tsx ventures standards.
what does a company need to sign if it wants to be listed on an exchange?
a listing agreement.
