Prospectus Disclosure and the Role of the Securities Commissions in Ontario and Bangladesh: A Comparative Study

The fundamental difference between Ontario law and Bangladesh law is that the former is based on the combination of the disclosure theory and the blue sky (merit review) theory while the latter is based on the disclosure theory alone. Accordingly, the Ontario Securities Commission (OSC) exercises twofold powers: it reviews the disclosures contained in a prospectus and also determines the merit of the offering. In other words, it ensures that full, true and plain disclosures are made in a prospectus, and at the same time it examines the offering to see whether any element jeopardizing the public interest is present in the offering. If it determines that any factor exists which suggests that it should be precluded in the public interest, it will refuse to receipt a prospectus. This thesis argues that the characteristic feature of a security transaction is that it involves risks a range of risks for investors including fraud risks which result from misstatement or understatement of material facts. Prospectus disclosures eliminate many of the risks arising from lack of information, and offer various investment opportunities to people who, depending on their differing risk bearing capabilities, make investment decisions in light of such disclosures