Why must disclosure be mandatory under the Ontario Securities Act?

grantor: University of TorontoThis thesis argues that statutory continuous disclosure requirements largely mimic the sorts of arrangements that issuers and shareholders would make between themselves if they were left unfettered by legislation. Nevertheless, disclosure laws may result in a savings of transactions costs as they enable issuers and investors to forgo the expense of negotiating over disclosure. However, transactions costs savings do not explain why disclosure must be mandatory and why issuers and shareholders should not be free to contract out of the Securities Act. It is argued that none of the other justifications for disclosure laws, including the accuracy enhancement and prevention of fraud justifications, explains their mandatory nature. This thesis also examines the recommendation of the Allen Committee that there be a statutory cause of action for false and misleading disclosure.LL.M