ASIC has commenced civil penalty proceedings in the Federal Court against Open4Sale Global Ltd (Open4Sale Global) and two of its directors, Simeon La Barrie and Ewald Hafer, for allegedly offering shares in the company and distributing application forms without the required disclosure document.
ASIC alleges that over a four-year period between March 2019 and July 2023, Open4Sale Global raised approximately $1.3 million from more than 80 investors, without lodging any disclosure document with ASIC, nor distributing the document to those investors when it offered them shares.
ASIC claims Open4Sale Global was required to lodge a disclosure document with ASIC and provide the document to these investors when it made the offers, because they were retail investors. ASIC claims they were not sophisticated investors or otherwise in a category of investor to whom exceptions to the disclosure requirements may apply.
ASIC Deputy Chair Sarah Court said, 'ASIC is concerned that investors have been encouraged to buy shares in Open4Sale Global without the company allegedly having provided sufficient information about its operations and financials. Disclosure documents help protect retail investors by showing them the risks and letting them make informed decisions about whether to invest.
‘Disclosure is fundamental to protecting Australian investors and ASIC will take action where these protections are being ignored,’ concluded Deputy Chair Court.
Mr La Barrie is based in the United States of America. He is the founder and an executive director of Open4Sale Global. ASIC alleges that Mr La Barrie caused the making of share offers and the distribution of application forms in Open4Sale Global.
Mr Hafer is an Australian director of Open4Sale Global who is alleged to have met with investors to distribute application forms for offers of shares in Open4Sale Global.
ASIC is seeking declarations of contraventions, pecuniary penalties, disqualification orders, and injunctions restraining Open4Sale, Mr La Barrie and Mr Hafer from raising funds for the company without having lodged a disclosure document.
The date for the first case management hearing is yet to be scheduled by the Court.
Download
Background
Open4Sale is an Australian unlisted public company, incorporated in 2012, that has sought to develop an e-commerce platform with the intention to licence it to international online shopping vendors.
Under section 727 of the Corporations Act, a person must not make an offer of securities or distribute an application form for an offer of securities, that needs disclosure to investors under Part 6D.2, unless a disclosure document for the offer has been lodged with ASIC and without the offer or application form being included in, or accompanied by, a disclosure document.
Editor's note 1:
The proceeding was before the Court for a Case Management Hearing on 5 March 2024. It was adjourned to a further Case Management Hearing on 22 May 2024.
Editor's note 2:
The proceeding was before the Court for a Case Management Hearing on 22 May 2024. At that hearing, an application by ASIC seeking interim injunctive relief against the Defendants was listed for argument on 21 June 2024.
Editor's note 3:
At the hearing on 21 June 2024, the Court granted the interim injunctive relief orders sought by ASIC against all Defendants, with the consent of the First and Third Defendants. The proceeding has been listed for a further Case Management Hearing on 14 October 2024, and for a 7 day trial on liability commencing on 3 February 2025.