Canadian Securities Course (CSC) Level 1 Practice Exam

When does a prospectus become "Blue-skyed"?

1. Before it is reviewed by regulatory authorities

2. After the final form prospectus is approved

3. Once the preliminary prospectus is issued

4. Once the issuer indicates interest in going public

The correct answer is: After the final form prospectus is approved

The correct answer reflects that a prospectus becomes "blue-skyed" after the final form prospectus is approved. In the context of securities regulation, "blue-skying" refers to the process of complying with state securities laws, which often requires filing a completed prospectus with the relevant regulatory authorities. Once the final version is approved, the issuer has successfully navigated the review process and can offer the securities to the public, allowing them to operate within the securities market legally in the jurisdictions specified. The other options highlight points in the process that do not represent the final approval stage. For instance, a preliminary prospectus does not contain the final details necessary for compliance, nor does expressing interest in going public initiate the blue-skying process. Therefore, the correct moment is indeed after the approval of the final form prospectus.