Policy Behind Continuous Disclosure Regime – Securities Regulation

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  1. Investor information; (2) accountability technique to encourage more eff management/ deterrent to fraud; (3) Creates equality of opportunity for all investors in the marketplace (sellers & buyers); (4) discourages transactions that don’t meet public scrutiny; (5) allows for disciplining of mgmt. (condemn/ commend)
  2. Investor Information: Give investors ability to determine whether they want to buy/sell or not, what price ought to be AND ensure this info remains current
  3. Accountability technique to encourage more eff management /deterrent to fraud: a) Should have to let investors know info so they can make educated decisions; (b) Creation of free, open securities markets, requires that there be free/open publicity, competing judgments of buyer/seller reflects just price, establishes true market value
  4. Creates equality of opportunity for all investors in the marketplace (sellers and buyers): According to OSC, if you have to disclose everything this leads to an Efficient Market – confidence necessary to run efficient capital markets (object is to make avail at all times, info investor needs)
  5. Discourages transactions that don’t meet public scrutiny: sunlight is the best disinfectant
  6. Allows for disciplining of management (condemn or commend)

National Policy 51-201: Disclosure Standards

Section 1.1 (1): “It is fundamental that everyone investing in securities have equal access to information that may affect their investment decisions”.

Competing concerns

  • Cost of disclosure can be high.
  • Too much information can lead to overload. Excessive disclosure can raise the cost of obtaining significant information.

Reporting Issuers ONLY: Only reporting issuers are subject to continuous disclosure (as defined in s.1(1) of OSA)

  • In some instances, disclosure may deter productive activity.

You can grab notes on other topic from here.


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