Prospectus and Disclosure Exemptions under Chapter 6D Corporations Act

Types of disclosure documents

Chapter 6D of the Corporations Act recognises four disclosure documents: a prospectus, a short-form prospectus, a profile statement, and an Offer Information Statement (OIS). A full prospectus is the default disclosure document for initial public offerings (IPOs) and large fundraisings. This document includes all material information that investors and their advisers reasonably need to make an informed investment decision.

A short-form prospectus (s 712) provides an alternative, allowing issuers to incorporate by reference documents already lodged with ASIC. This significantly reduces the length of the disclosure document. A profile statement (s 714) is a shorter summary and can only be used with ASIC approval for the relevant class of offer. ASX Listing Rules continuous disclosure requirements also apply.

Regardless of the type of disclosure document used, it must be lodged with ASIC before the offer can be used to raise funds. Details of the offer must also be entered into the ASIC OFFERlist platform.

Offer Information Statement (OIS)

An Offer Information Statement (OIS) (s 709(4)) provides an alternative disclosure pathway to a prospectus for certain offerings. An issuer and its related parties can use an OIS if the total funds raised under all OISs by those parties does not exceed $10 million in aggregate. This pathway allows for a less detailed disclosure document than a full prospectus, while still providing investors with essential information. Design and distribution obligations RG 274 governs the suitability of offers made under an OIS.

An OIS must include specific information, such as the identity of the issuer, the purposes of the fundraising, key risks, and the rights attaching to the securities being offered. It also requires a current audited financial report, prepared no more than 6 months before the offer. The document must also contain a warning to investors advising them to obtain professional investment advice before investing.

Certain offers are ineligible for an OIS. These include offers of debentures and securities of a foreign body. The OIS pathway is designed to streamline the disclosure process for smaller offerings, but it is subject to strict limitations regarding the total funds raised and the types of securities offered.

Employee share scheme relief

The Treasury Laws Amendment (Cost of Living Support and Other Measures) Act 2022 introduced new Division 1A of Part 7.12, providing tailored employee share scheme (ESS) disclosure relief from 1 October 2022. This allows listed entities to offer ESS interests to employees without the need for a Chapter 6D disclosure document, provided they adhere to the ESS-specific disclosure regime.

Unlisted entities can also benefit from this relief, subject to a $30,000 monetary cap per employee per year and specific tailored disclosure requirements. Previously, ASIC Class Order 14/1000 provided similar relief, but this has now been superseded by the provisions within Division 1A. AFSL best interests duty section 961B

It is important to note that the tax concessions available for ESS interests are separate from this Chapter 6D relief and continue to be governed by Division 83A of the *Income Tax Assessment Act 1997*.

Other exemptions and combined limits

Crowd-sourced funding (CSF) provides an exemption under Part 6D.3A, allowing eligible companies to raise up to $5 million per 12-month period through a licensed intermediary. Certain rights issues by listed entities can also utilise an exemption, requiring a cleansing notice instead of a prospectus. Similarly, same-class placements by listed entities under s 708A can be exempt from disclosure, again utilising a cleansing notice for both the placement and subsequent on-sale. ASX Listing Rule 10.1 related party transactions may need consideration when structuring these offerings.

The $10 million Off-Market Transfers (OIS) cap applies to all OIS issued by an issuer and any related bodies corporate over a 12-month rolling period. This limit is calculated across all OIS issued, not per individual transfer.

It is important to note that despite these exemptions, the provision of misleading or deceptive statements in disclosure documents remains subject to personal liability. Directors, advisers and offerors can be held accountable under sections 728-730 for any such inaccuracies.