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Private & public capital raisings   pjm presentation
Private & public capital raisings   pjm presentation
Private & public capital raisings   pjm presentation
Private & public capital raisings   pjm presentation
Private & public capital raisings   pjm presentation
Private & public capital raisings   pjm presentation
Private & public capital raisings   pjm presentation
Private & public capital raisings   pjm presentation
Private & public capital raisings   pjm presentation
Private & public capital raisings   pjm presentation
Private & public capital raisings   pjm presentation
Private & public capital raisings   pjm presentation
Private & public capital raisings   pjm presentation
Private & public capital raisings   pjm presentation
Private & public capital raisings   pjm presentation
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Private & public capital raisings pjm presentation

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The legalities involved in raising capital for public and private companies

The legalities involved in raising capital for public and private companies

Published in: Economy & Finance, Business
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  • 1. Private & Public Company Capital Raisings – Legal Issues<br />Paul Miller<br />Partner, Deutsch Miller<br />Institute of Chartered Accountants<br />Tuesday, 8 June 2010<br />Disclaimer: This presentation provides a general overview only of the topic materials and should not be treated as or relied upon as professional advice.<br />
  • 2. 1. Principal Fundraising Provisions<br /><ul><li>Principal fundraising provisions are in Chapter 6D of the Corporations Act 2001
  • 3. s706 – an offer of securities for issue needs disclosure to investors under this Part unless section 708 or 708AA says otherwise
  • 4. Key Question when considering legal issues: </li></ul> ‘Does a disclosure document need to be produced?’ <br /><ul><li>Key considerations to establish whether a company can use an exemption:
  • 5. how much money is being raised?
  • 6. what type of persons will be investing?</li></ul>1<br />
  • 7. 2. Restrictions – Type of Companies<br /><ul><li>Pty Companies
  • 8. restrictions from using disclosure documents
  • 9. must use exemption or raise equity funds from existing shareholders or employees
  • 10. All Public Companies
  • 11. can use disclosure documents
  • 12. can raise equity funds using exemptions
  • 13. Public (Quoted) Companies
  • 14. ASX listing rule 7.1 – restriction on issuing more than 15% of share capital (on a non-pro rata basis) without shareholder approval</li></ul>2<br />
  • 15. 3. Types of Equity Fundraisings<br /><ul><li>Seed capital
  • 16. Venture capital/private equity
  • 17. IPO
  • 18. Placements
  • 19. Rights issues
  • 20. Share purchase plan – up to $15,000
  • 21. Dividend reinvestment plan</li></ul>3<br />
  • 22. 4. Main Exemptions<br /><ul><li>“Small scale offerings” – (20/12 offers)
  • 23. “Sophisticated investors”
  • 24. Large investments - $500,000 minimum
  • 25. Certificated high net worth investor
  • 26. Offers through financial services licensee
  • 27. Professional investor
  • 28. “Rights issues” – note cleansing notice</li></ul>4<br />
  • 29. 5. Procedure for Offering Securities<br /><ul><li>Required steps to comply with disclosure obligations:
  • 30. prepare disclosure document
  • 31. lodge disclosure document with ASIC
  • 32. offer securities using disclosure document
  • 33. hold application money received on trust
  • 34. issue securities in response to valid application form</li></ul>5<br />
  • 35. 6. Types of Disclosure Documents<br /><ul><li>Prospectus – the standard disclosure document, with the broadest information requirements
  • 36. Offer information statement – a simplified form of disclosure document for fundraisings of up to $10 million
  • 37. Profile statement – allows comparison between similar investment products in managed funds industry
  • 38. Short form prospectus – a prospectus that allows information to be incorporated by reference
  • 39. Prospectus for continuously quoted securities</li></ul>6<br />
  • 40. 7. Content Requirements for Disclosure Documents<br /><ul><li>Specific requirements – limited for prospectuses, eg. terms and conditions of offer
  • 41. General requirements – the “reasonable investor” test:</li></ul>All information that investors and their professional advisors would reasonably require to make an informed assessment <br /> of … :<br /><ul><li>Assets and liabilities
  • 42. Financial position and performance
  • 43. Profits and losses; and
  • 44. Prospects
  • 45. Quoted securities – comply with ASX Listing Rule 1.1</li></ul>7<br />
  • 46. 8. Restrictions on Advertising<br /><ul><li>Where disclosure document not required:
  • 47. save for personal offers, any form of advertising is permitted – note liability for misleading and deceptive conduct
  • 48. Where disclosure document required:
  • 49. For unquoted shares - only a very vanilla advertising “tombstone” statement is allowed
  • 50. For quoted securities – due to general regulation of information, limited regulation on advertising – requirement to refer to availability of disclosure document </li></ul>8<br />
  • 51. 9. Restrictions on Hawking <br /><ul><li>Restrictions on offering securities during an unsolicited meeting or telephone call, subject to exemptions
  • 52. ASIC’s view: a meeting or telephone call is “unsolicited” unless it takes place in response to a “positive specific or informed request”</li></ul>9<br />
  • 53. 10. Liability for Defective Disclosure<br /><ul><li>Liability regime comprises:
  • 54. Specific civil and criminal liability under the Corporations Act for defective disclosure documents – Part 6D.3 - fault based liability
  • 55. Key provision is s728 – re disclosure documents - covers misleading/deceptive statements, omissions or new circumstances
  • 56. A contravention may lead to a liability to compensate investors. Contravention may also lead to criminal liability
  • 57. Defences: due diligence (made all enquiries); lack of knowledge; reasonable reliance (expert’s report); and other defences</li></ul>10<br />
  • 58. 10. Liability (cont)<br /><ul><li>Civil liability for misleading and deceptive conduct under s1041H – strict liability regime
  • 59. 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
  • 60. Overlap with s12DA of the ASIC Act – which applies to conduct in trade or commerce in relation to financial services
  • 61. Operates to exclude s52 of the Trade Practices Act
  • 62. s1041H and s12DA ASIC Act do not apply for conduct that contravenes s728</li></ul>11<br />
  • 63. 11. Summary – Using a Disclosure Document<br /><ul><li>Cost and time of producing disclosure document
  • 64. Specific and general content requirements
  • 65. No limitation on to whom disclosure document can be sent within Australia
  • 66. Restrictions on advertising and hawking – minor restrictions for quoted securities
  • 67. Availability of due diligence defences for mis-statements in or omissions from disclosure document</li></ul>12<br />
  • 68. 12. Summary – Not Using a Disclosure Document<br /><ul><li>Cheaper and quicker process
  • 69. Shorter form information memorandum
  • 70. Limitations on type of persons who can invest and amount of money that can be invested
  • 71. No restrictions on advertising to “sophisticated persons” – note 20/12 offers are restricted
  • 72. No due diligence defences available for misleading or deceptive conduct</li></ul>13<br />
  • 73. Paul Miller<br />Paul is a Corporate Partner at corporate and commercial boutique Sydney law firm Deutsch Miller, which specialises in transactional, advisory and litigation work.<br />Paul has around 10 years experience as a partner at top firms in both Australia and the UK advising listed and unlisted companies on various fundraising transactions.  Paul left Atanaskovic Hartnell, a leading Sydney boutique firm, last year with 2 other partners to set up Deutsch Miller.<br />Paul has significant transactional experience obtained in the Sydney and London markets across the full spectrum of transactional and advisory work, in areas that include capital raisings, flotations, joint ventures, mergers & acquisitions, MBOs, venture capital/private equity and a variety of commercial contracts.<br />Deutsch Miller acts for corporates, boards, individual directors/ officers and high net worth individuals.<br />Contact Details:<br />paul.miller@deutschmiller.com<br />02 9210 7773<br />www.deutschmiller.com<br />14<br />

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