Podcast
Questions and Answers
What is a requirement for an issuer to use a short form prospectus?
What is a requirement for an issuer to use a short form prospectus?
- Must operate in multiple jurisdictions outside Canada.
- Must be in business for at least five years.
- Must have a history of profitability.
- Must file electronically using SEDAR+. (correct)
Which of the following is NOT an advantage of listing shares on an exchange?
Which of the following is NOT an advantage of listing shares on an exchange?
- Establishment of market value.
- Additional controls on management. (correct)
- Increased market visibility.
- Increased investor following.
What must be true about an issuer to ensure continuous disclosure obligations?
What must be true about an issuer to ensure continuous disclosure obligations?
- The issuer must have a minimum number of employees.
- The issuer must be a reporting issuer in at least one Canadian jurisdiction. (correct)
- The issuer must issue securities only in foreign markets.
- The issuer must operate in multiple sectors of the economy.
Which method is NOT used for after-market stabilization by the lead dealer?
Which method is NOT used for after-market stabilization by the lead dealer?
Which of the following represents a disadvantage of being a reporting issuer?
Which of the following represents a disadvantage of being a reporting issuer?
Which statement about the SEDAR+ system is correct?
Which statement about the SEDAR+ system is correct?
What role does the underwriter play in a primary offering of securities?
What role does the underwriter play in a primary offering of securities?
What are treasury shares?
What are treasury shares?
How does a secondary offering differ from a primary offering?
How does a secondary offering differ from a primary offering?
What is a firm commitment agreement in the context of bond issuance?
What is a firm commitment agreement in the context of bond issuance?
What responsibilities does the financing group have when issuing bonds?
What responsibilities does the financing group have when issuing bonds?
What does the financing group accept on behalf of its members during the bond issuance process?
What does the financing group accept on behalf of its members during the bond issuance process?
What is the role of the managing underwriter in the bond issuance process?
What is the role of the managing underwriter in the bond issuance process?
What documents are typically prepared by the financing group for bond issuance?
What documents are typically prepared by the financing group for bond issuance?
Why do treasury shares not hold voting rights or dividend entitlements?
Why do treasury shares not hold voting rights or dividend entitlements?
What is a defining characteristic of debentures?
What is a defining characteristic of debentures?
Which factor is NOT considered when a corporation selects a lead dealer for financing?
Which factor is NOT considered when a corporation selects a lead dealer for financing?
What is the primary purpose of the due diligence report prepared by the dealer?
What is the primary purpose of the due diligence report prepared by the dealer?
In addition to evaluating the corporation, what else is included in the dealer's assessment?
In addition to evaluating the corporation, what else is included in the dealer's assessment?
What outcome is associated with securing a reputable dealer for a corporate issue?
What outcome is associated with securing a reputable dealer for a corporate issue?
What type of report is typically generated after the assessment of a corporation's financial status?
What type of report is typically generated after the assessment of a corporation's financial status?
Which of the following financial options is NOT mentioned as an alternative to debentures for corporations?
Which of the following financial options is NOT mentioned as an alternative to debentures for corporations?
What role does the lead dealer play in the financing process for a corporation?
What role does the lead dealer play in the financing process for a corporation?
What is one of the primary benefits of conducting an assessment prior to negotiations for a new securities issue?
What is one of the primary benefits of conducting an assessment prior to negotiations for a new securities issue?
What is included on the cover page of a prospectus for an offering of securities?
What is included on the cover page of a prospectus for an offering of securities?
Why is it important for potential purchasers to consider the information presented in a prospectus?
Why is it important for potential purchasers to consider the information presented in a prospectus?
Which section of the prospectus summarizes information likely to influence an investor’s decision?
Which section of the prospectus summarizes information likely to influence an investor’s decision?
What type of information is provided regarding the issuer in the prospectus?
What type of information is provided regarding the issuer in the prospectus?
What does the section regarding securities in a prospectus NOT typically include?
What does the section regarding securities in a prospectus NOT typically include?
What information is typically found in the officers and shareholders section of a prospectus?
What information is typically found in the officers and shareholders section of a prospectus?
Which aspect is NOT typically highlighted in a prospectus when summarizing the offering?
Which aspect is NOT typically highlighted in a prospectus when summarizing the offering?
What is the significance of market out clauses as mentioned in the cover page of a prospectus?
What is the significance of market out clauses as mentioned in the cover page of a prospectus?
What does the summary in a prospectus not typically include?
What does the summary in a prospectus not typically include?
Which of the following is true regarding the information related to the issuer's capital structure in a prospectus?
Which of the following is true regarding the information related to the issuer's capital structure in a prospectus?
What is the role of the banking group in a bond issue?
What is the role of the banking group in a bond issue?
Which group is responsible for selling bonds but is not part of the banking group?
Which group is responsible for selling bonds but is not part of the banking group?
Who can be classified as casual dealers?
Who can be classified as casual dealers?
What might prompt the issuer to demand special consideration for a dealer?
What might prompt the issuer to demand special consideration for a dealer?
What typically characterizes the exempt list in the context of bond sales?
What typically characterizes the exempt list in the context of bond sales?
What is one of the primary concerns for securities administrators regarding capital raising?
What is one of the primary concerns for securities administrators regarding capital raising?
How may the designation of bonds set up by the financing group change?
How may the designation of bonds set up by the financing group change?
What distinguishes equity financing from debt financing?
What distinguishes equity financing from debt financing?
What can special group orders result from?
What can special group orders result from?
What is a likely consequence of the safeguards in securities issuance?
What is a likely consequence of the safeguards in securities issuance?
Study Notes
Debentures and Financing Options
- Debentures rely solely on the corporation's creditworthiness without specific asset pledges.
- Corporations have various financing alternatives: bank loans, commercial paper, leasing, government grants, and export financing.
Dealer's Advisory Relationship
- Corporations engage dealers for financing advice, focusing on timing, amount, and pricing of securities issuance.
- A reputable lead dealer can enhance market acceptance and reduce financing costs.
- Dealers conduct thorough assessments of the corporation, its industry, and risk factors to prepare due diligence reports.
- Expertise in pricing and marketing is crucial during the primary offering of securities.
Treasury Shares and Offerings
- Companies can repurchase outstanding shares, known as treasury shares, which lack voting and dividend rights but can be resold later.
- Secondary offerings involve selling previously issued stock by major shareholders, managed by investment dealers.
- In bond issuance, a financing group led by a lead underwriter manages the public resale of bonds at par value.
Financing Group Roles
- The financing group provides advice on issue structure, covenants, and timing, and prepares necessary documentation like prospectuses.
- The banking group consists of additional dealers sharing financial liability for their participation in the bond issue.
- Selling groups and casual dealers assist with bond sales, and certain orders may be exempted based on issuer requirements.
Prospectus System and Safeguards
- Securities issuances must comply with safeguards to protect investors and ensure capital market integrity.
- The prospectus includes crucial offering details, summaries, and information related to the issuer, securities, and corporate officers.
- Short form prospectuses may be utilized under specific conditions by reporting issuers.
After-Market Stabilization Process
- After securities issuance, lead dealers may stabilize the market by managing sales and creating open bids at the offer price.
- Listing shares on an exchange provides advantages including market visibility and investor interest but also incurs added management controls and disclosure requirements.
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Description
This quiz covers the fundamentals of debentures as discussed in the Canadian Securities Course. Debentures are defined by their reliance on the corporation's creditworthiness rather than specific asset backing. Gain insight into various financing options available to corporations alongside debentures.
