Offers to the public to invest in a public company must be made by way of a prospectus.
In general, the function of the prospectus is to disclose to potential investors and advisors sufficient information regarding the financial position of the company and the nature of the security on offer, so that they are able to make an informed investment decision.
A legally compliant prospectus should not be regarded as a guarantee of the financial stability of a particular corporation. Investors and their advisers are themselves responsible for evaluating the financial position and the prospects of the corporation, which is the subject matter of the prospectus.
At present prospectus requirements and usage are rigidly regulated by the Corporations Law. These requirements have been reviewed by the CLERP Act 1999 (Commonwealth). Among the CLERP amendments is provision for prospectuses to take a variety of forms:
1 Standard full disclosure prospectus - as required by the existing Corporations Law. These will still be used to make disclosure to professional advisers.
2 Short form prospectus- which merely makes reference to information lodged with ASIC rather than detailing it in the prospectus itself. These will be available to retail investors.
3 A profile statement - which refers interested investors to a full disclosure prospectus lodged with ASIC. A copy will be provided to interested investors upon request. Profile statements will enable investors to compare similar products.
4 An offer information statement - which may be used in respect of fundraising up to $5 million.
Prospectus Lodgment and Registration
Prospectuses must be lodged and registered (ie reviewed by ASIC), unless they fall within the exemptions outlined in s1017A(3) of the Corporations Law.
This is a very brief introduction to this aspect of corporations law and is not intended to be legal advice. This publication cannot be relied on as a substitute for appropriate legal advice suited to your circumstances. Given that this is the case, you should seek and retain the advice of a solicitor if you require a comprehensive and up to date analysis of the law pertaining to your circumstances
March 2001
March, 2001
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