An offering memorandum (OM) must contain all
information material to the investment opportunity to enable an
investor to make an informed investment decision. What information
is material depends on the specific business and investment
opportunity of an issuer. Under Canadian securities laws, an issuer
must ensure there is no misrepresentation in an OM at the time of
sale. A misrepresentation is (a) an untrue
statement of material fact or (b) an omission to state a
material fact required to be stated or that is necessary to make a
statement not misleading in the light of the circumstances in which
it was made.
Failure to ensure an OM does not contain a misrepresentation has
serious consequences. Investors have rights of action, statutory
and common law, against an issuer and others to sue for rescission
or damages if an OM contains a misrepresentation. Investors have a
statutory right of action against the issuer and others if the
issuer prepared the OM in reliance
