Ontario Barrister and Solicitor Practice Exam

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To whom can a private corporation issue its shares without registration and prospectus?

  1. General public

  2. Any interested investor

  3. Current or former directors or current officers

  4. Foreign corporations

The correct answer is: Current or former directors or current officers

Private corporations are not allowed to issue shares to the general public without proper registration and disclosure (prospectus). Option A is incorrect because it contradicts the rules and regulations set by securities laws. Option B is incorrect because interested investors still need to comply with securities laws and regulations. Option D is incorrect because foreign corporations are also subject to the same securities laws and regulations. Therefore, the only option that is allowed to receive shares without registration and prospectus is option C, current or former directors and current officers of the private corporation. This is because they already have access to information about the company and can evaluate the risks associated with investing in the company without the need for a prospectus.

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