s706 – an offer of securities for issue needs disclosure to investors under this Part unless section 708 or 708AA says otherwise

how much money is being raised?

restrictions from using disclosure documents

must use exemption or raise equity funds from existing shareholders or employees

All Public Companies

can use disclosure documents

can raise equity funds using exemptions

Public (Quoted) Companies

Venture capital/private equity

IPO

Placements

Rights issues

Share purchase plan – up to $15,000

“Sophisticated investors”

Large investments - $500,000 minimum

Certificated high net worth investor

Offers through financial services licensee

Professional investor

prepare disclosure document

lodge disclosure document with ASIC

offer securities using disclosure document

hold application money received on trust

Offer information statement – a simplified form of disclosure document for fundraisings of up to $10 million

Profile statement – allows comparison between similar investment products in managed funds industry

Short form prospectus – a prospectus that allows information to be incorporated by reference

Financial position and performance

Profits and losses; and

Prospects

save for personal offers, any form of advertising is permitted – note liability for misleading and deceptive conduct

Where disclosure document required:

For unquoted shares - only a very vanilla advertising “tombstone” statement is allowed

Specific civil and criminal liability under the Corporations Act for defective disclosure documents – Part 6D.3 - fault based liability

Key provision is s728 – re disclosure documents - covers misleading/deceptive statements, omissions or new circumstances

A contravention may lead to a liability to compensate investors. Contravention may also lead to criminal liability

Covers any misleading conduct in relation to a financial product or financial services. Engaging in conduct includes: dealing in a financial product; and issuing a financial product

Overlap with s12DA of the ASIC Act – which applies to conduct in trade or commerce in relation to financial services

Operates to exclude s52 of the Trade Practices Act

Specific and general content requirements

No limitation on to whom disclosure document can be sent within Australia

Restrictions on advertising and hawking – minor restrictions for quoted securities

Shorter form information memorandum

Limitations on type of persons who can invest and amount of money that can be invested

No restrictions on advertising to “sophisticated persons” – note 20/12 offers are restricted