CORPORATE AND SECURITIES LAW - Case Study Example

Corporate and Securities Law Corporate law governs the establishment and operations of corporations. Close link exist between corporate law and commercial and contract law. A corporation refers to a legitimate entity established through the laws of its national of incorporation, which defines a corporation as a legal body that can sue or face trial, separate from its shareholders. Security laws ensure that investors receive the required information; information should be accurate and updated. Such information regards the nature and value of the interest under contemplation for purchase.

The paper applies both corporate and securities law to solve the issue existing at Bagofglass, Inc. (BofG).Peter, the petitioner in the case, seeks compensation for damages caused by Bog as provided under section 11 of corporate law. Bagofglass Inc., through its CEO, Mr. Erwin Mainway, signed the registration statement. The statement took effect on January 1, 2011 after its successful filing on December 10, 2010. In the statement, Bagofglass Inc declared public offering of its shares. Mr. Peter bought shares after the statement became effective.

Each share sold at ten dollars; Peter purchased a thousand shares. On January 15, the Company violated the agreement stipulated in the statement by selling its shares at fifteen dollars per share. Peter, the plaintiff, therefore, alleges that Bagofglass violated the law by omitting the facts stated in the registration statement. Therefore, the registration statement signed by Erwin was misleading. In this case, Bagofglass Inc’s CEO is liable as the signatory and director of the corporation.

Corporate Law provides that if an individual purchases the shares not in the initial offer, except when from a third party, the plaintiff may seek compensation for damages caused by false statements as provided under section 11. Therefore, it is possible for Mr. Peter to recover against Bagofglass and its staff involved in giving a misleading registration statement. The staff includes Mr. Ewin Mainway (Bagofglass Inc.’s CEO), the law firm representing Bagofglass Inc., Dewy, Cheat hem and How (DUCHY) and the accounting firm representing BofG, Ernest and Ernest, LLP (E&E).

The law firm, DC&H is liable if they expertise the portion of the initial public offering of Bagofglass, Inc. The aforementioned statement takes effect only if the conducted reasonable investigations provide facts beyond reasonable doubt that DUCHY participated at the time when the registration statement thereon was untrue. However, DC&H are not liable in the event that the registration statement is reasonably valid after conducting satisfactory investigations. The accounting firm, E&E on the other hand, are not liable by virtue of being accountants, but where they expertise liable under section 11(a) (4).

Bagofglass Inc., under section 11(e) of the corporate law, can show that the false registration statement did not cause damages as claimed by the plaintiff. Damages caused are tantamount to the amount paid at the time of issuing the statement, less the value of the security when the plaintiff made the suit. In the case of Peter vs. Bagofglass Inc., the damage was barely material. Consequently, the burden shifts to Mr. Peter, the petitioner in the case, to indicate if material issue of fact existed.