KGC Ltd. is hoping to raise $5 billion AUD, KGC Ltd. via a share issue. In the share prospectus,3 KGC Ltd. Noted that its PNG operations are its principal asset and described the operations as low risk and indefinite (permanent) in duration. Are you willing to sign-off on that prospectus as being true and fair? (Explain)
KGC Ltd plans to raise investment of $ 5 billion AUD through the issue of shares by portraying the assets to be at low risk is not a fair statement. A shareholder before investing in any company needs to go through the company’s prospectus in which he would be able to find various types of information required to enquire into before taking any investment decision. A company planning to make additional investment through the issue of shares provide the clients with different information about the company future prospects , strategy followed by it, investment objectives ,any risks if it would be exposed to, pricing of the product ,corporate responsible ,depiction of a fair financial statements , policy of fund and its history , measures of performance , commission , brokerage, matters of tax(“SEC.Gov | Investment Company, Shareholders' Information").
The willing investors should have access to all these information in details. Investors needs to do their own research . The risk which company would face in carrying out their operation should be properly told so that the investors would be able to form speculation about the risks involved (“Raising Funds In Australia | ASIC - Australian Securities And Investments Commission") . Here KGC Ltd is making a misrepresentation by describing the operation to be indefinite and at low risk. The fact that the license to continue mining activity from PNG government will expire in eight years and the ongoing court case due to the allegation of being environmentally irresponsible by some ecological group is making the continuation of the firm doubtful. So the prospectus could not be signed off as being true and fair by the investors.
Raising Funds In Australia | ASIC - Australian Securities And Investments Commission". Asic.gov.au. N.p., 2016. Web. 25 May 2016.
SEC.Gov | Investment Company, Shareholders' Information". Sec.gov. N.p., 2016. Web. 25 May 2016.