What documentation do you need to give potential investors when raising funds?
As a general rule, if you are a public company offering securities for sale (for example shares or debentures) then you must provide a disclosure document of some sort to potential investors.
A disclosure document is the broad term used to describe all regulated fundraising documents for the issue of securities (for example shares or debentures).
All companies entitled to fundraise can use a prospectus. You may also be able to use an offer information statement or a profile statement depending on the type of fundraising you intend to do and whether you satisfy the restrictions imposed on using those documents. The type of information you'll be required to provide in each of these disclosure documents is different in certain respects.
Prospectuses
A prospectus is the standard disclosure document and has the broadest information requirements. If your prospectus offers securities listed on a stock exchange it may not need to contain as much information as others because much of the information will already have been provided to the public through the exchange. For more information see ASIC Regulatory Guide 56 Prospectuses.
Offer information statements
An offer information statement (OIS) has lower disclosure requirements but can only be used for fundraising up to $10 million in aggregate, that is, including any earlier fundraising under an OIS. If you want to use an OIS you must be able to include with it a copy of an audited financial report with a balance date within the last six months.
Profile statements
A profile statement is a document setting out limited key information about the company and the offer. Companies can only use profile statements where ASIC has approved their use. There are currently no approved uses for profile statements.
Lodging prospectuses and other disclosure documents
You must lodge your disclosure document with ASIC before it can be used to raise funds.
When you have completed the preparation of an offer document:
use OFFERlist Entry to record summary information about your offer for display on OFFERlist. This summary information will be stored and not published on OFFERlist until the disclosure document has been physically lodged with ASIC.
If you plan to distribute the disclosure document electronically you must also lodge an electronic version of the disclosure document via OFFERlist Entry.
Lodge your disclosure document with the appropriate fee as follows:
If by hand delivery, to your state or territory's ASIC Service Centre, unless you are based in NSW. NSW documents should be hand delivered to the NSW Regional Office
Stop orders: what they are and when we will issue one
A stop order is an administrative mechanism that allows ASIC to prevent offers being made under a disclosure document where we believe it contains:
a misleading or deceptive statement
an omission of information required to be provided under the legislation, or
a new circumstance has arisen since the disclosure document was lodged.
If we impose a stop order on your disclosure document, your company is not allowed to offer, issue, sell or transfer its shares while that order is in force. An interim stop order may be made for up to 21 days, during which time a hearing must be held to give your company a chance to put its views to an independent delegate. After the hearing we may lift the interim stop order or place a final stop order on the disclosure document.
Under what circumstances can you fundraise without a disclosure document?
There are a number of circumstances when we will give an exemption from the requirement to provide a disclosure document when fundraising. It is important that you get legal advice about whether they apply to you. A general summary of the exemptions is provided here. For more information see ASIC Regulatory Guide 56 Prospectuses.
In summary, a disclosure document is not required when:
an offer is a personal offer, and if:
offers or invitations have been made to fewer than 20 persons in the previous 12 months, and
the new offer will not result in more than $2 million being raised in that 12 months;
Note: you must not advertise the offer when you rely on this exemption
the offers are made to specified people who are presumed not to need disclosure because of their financial capacity, experience, or wholesale status;
the offers are made to current holders of the securities;
no money or other form of payment is payable for the securities;
other disclosure regimes under the Corporations Act apply (i.e. takeovers, schemes of arrangement);
the offer is made by certain types of financial institutions.
Are there any restrictions on advertising or 'cold calling'?
There are significant restrictions on advertising and 'cold calling' (ie calling members of the public without their prior consent) in relation to investments that require a disclosure document.
You are generally not allowed to cold call members of the public to sell shares, although if you are a licensed securities dealer you may do so in certain circumstances. For more information see ASIC Regulatory Guide 56 Prospectuses.
If a disclosure document is required for the offer of securities you cannot advertise the offer until the disclosure document has been lodged. When the disclosure document has been lodged you may advertise the offer as long as that advertising includes a statement that:
offers will be made in or accompanied by a copy of the disclosure document, and
anyone wishing to buy securities will need to complete the application form in the disclosure document.
Use our Road map - fundraising for a list of regulatory documents about fundraising .