The impact of non-compliance with the legal requirements for disclosure of information on securities transaction

Due to the specific characteristics of securities, in securities contracts it is difficult for the investors to have the information which is necessary for entering into the contract. Accordingly, in accordance with the Securities Market Act and the relevant regulations, the issuers of securities, in the primary and secondary markets, are required to disclose material information about securities. The main purpose of imposing these requirements on issuers is to inform investors and make it possible for them to make informed decisions about securities transaction. The main question of  this article is if the failure to comply with legal disclosure requirements will affect the validity or necessity of securities transactions. In other words, if the issuer don’t disclose all the material information, and some investors buy or sell the securities for these information; can the transaction be considered void or voidable? In short, it can not be ruled out in general that the nullity or voidability of the contract is impossible, and in limited cases, the failure to comply with those requirements may result in nullity or voidability in the contract.