Corporations Act 2001
CHAPTER 6D
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FUNDRAISING
PART 6D.3A
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CROWD-SOURCED FUNDING
Division 1
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Introduction
SECTION 738A
738A
OBJECT
The object of this Part is to provide a disclosure regime that can be used for certain offers of securities for issue in small unlisted companies, instead of complying with the requirements of Part 6D.2 .
SECTION 738B
738B
MEANING OF
CSF OFFER
A CSF offer is an offer that is:
(a) eligible to be made under this Part (see Division 2); and
(b) expressed to be made under this Part.
SECTION 738C
738C
MEANING OF
CSF INTERMEDIARY
A CSF intermediary is a financial services licensee whose licence expressly authorises the licensee to provide a crowd funding service.
SECTION 738D
738D
MEANING OF RETAIL CLIENT IN RELATION TO A CSF OFFER
If a person (not being the company making the CSF offer) is a retail client in relation to the provision of a crowd-funding service that relates to a particular CSF offer, then, for the purposes of this Part, the person is a retail client in relation to that CSF offer.
SECTION 738E
738E
OFFER OF THE SECURITIES MAY ALSO BE MADE IN RELIANCE ON SECTION 708
The fact that a company makes a CSF offer of securities does not prevent the company from also making an offer, in reliance on a provision of section 708 , of securities that are of the same class as those offered under the CSF offer.
SECTION 738F
APPLICATION OF PROVISIONS OF CHAPTER 7 RELATING TO HOW OBLIGATIONS ETC. APPLY TO DIFFERENT KINDS OF PERSONS
738F(1)
Subject to subsections (2) and (3), the following provisions of Chapter 7 (the applied provisions ) have effect for the purposes of this Part as if references in the provisions to that Chapter were instead references to this Part:
(a) section 761F (meaning of person - generally includes a partnership);
(b) section 761FA (meaning of person - generally includes multiple trustees);
(c) section 769B (people are generally responsible for the conduct of agents, employees etc.).
738F(2)
Subsection (1) does not apply to provisions of the sections mentioned in subsection (1) that are expressed to relate only to specific provisions of Chapter 7 or to specific Parts, Divisions or Subdivisions of Chapter 7.
738F(3)
The regulations may provide that one or more of the applied provisions have effect for specified purposes subject to modifications specified in the regulations. The regulations have effect accordingly.
Division 2
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Offers that are eligible to be made under this Part
SECTION 738G
OFFERS THAT ARE ELIGIBLE TO BE MADE UNDER THIS PART
738G(1)
An offer is eligible to be made under this Part if:
(a) it is an offer by a company for the issue of securities of the company; and
(b) the company is an eligible CSF company (see section 738H ) at the time when the offer is made; and
(c) the securities are of a class specified in the regulations; and
(d) the offer complies with the issuer cap (see subsection (2) of this section); and
(e) the funds sought to be raised by the offer are not intended by the company to be used, to any extent, by the company or a related party of the company, to invest in securities or interests in other entities or schemes; and
(f) any other requirements specified in the regulations are satisfied in relation to the securities or the offer.
The issuer cap
738G(2)
For the purpose of this section, an offer of securities for issue in a company (the new offer ) complies with the issuer cap if the total of:
(a) the maximum amount sought to be raised by the new offer; and
(b) all amounts raised, in the period of 12 months before the time when the new offer is made, pursuant to CSF offers that were made in that period by the company or by related parties of the company; and
(c) all amounts raised, in the period of 12 months before the time when the new offer is made, pursuant to offers made by the company, or by related parties of the company, that did not need disclosure because of subsection 708(1) or (10) ;
(d) $5 million; or
(e) if the regulations prescribe a different amount - the prescribed amount.
Meaning of related party
738G(3)
For the purposes of this Part, each of the following is a related party of a company:
(a) a related body corporate of the company;
(b) an entity controlled by:
SECTION 738H
MEANING OF
ELIGIBLE CSF COMPANY
738H(1)
A company is an eligible CSF company at a particular time (the test time ) if all of the following conditions are satisfied in relation to the company at the test time:
(a) the company is a public company limited by shares, or the company is a proprietary company that:
(b) the company ' s principal place of business is in Australia;
(c) a majority of the company ' s directors (not counting alternate directors) ordinarily reside in Australia;
(d) the company complies with the assets and turnover test (see subsection (2));
(e) neither the company, nor any related party of the company, is:
(f) neither the company, nor any related party of the company, has a substantial purpose of investing in securities or interests in other entities or schemes.
The assets and turnover test
738H(2)
The company complies with the assets and turnover test at the test time if:
(a) the value of the consolidated gross assets of the company, and of all its related parties is less than:
(b) the consolidated annual revenue of the company, and of all its related parties, is less than:
Division 3
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Making offers under this Part
SECTION 738J
CSF OFFER DOCUMENT TO BE PREPARED
738J(1)
A document (a CSF offer document ) must be prepared for a CSF offer.
738J(2)
A CSF offer document for a CSF offer must contain the information required by the regulations. The document may also set out the CSF offer.
SECTION 738K 738K OTHER REQUIREMENTS FOR CSF OFFER DOCUMENT
The information in a CSF offer document must be worded and presented in a clear, concise and effective manner. The document must also comply with any other requirements prescribed by the regulations.
SECTION 738L
CSF OFFER DOCUMENT TO BE PUBLISHED ON PLATFORM OF A SINGLE CSF INTERMEDIARY
738L(1)
A CSF offer of a company ' s securities must be made by publishing, on a platform of a single CSF intermediary, a CSF offer document that complies with section 738J . If the CSF offer document does not set out the CSF offer, the CSF offer must be published together with the offer document.
738L(2)
The arrangement (the hosting arrangement ) between the company and the CSF intermediary for the publication of the CSF offer document must require all applications made in response to the offer, and all application money in respect of such applications, to be sent or paid to the intermediary and dealt with by the intermediary in accordance with this Part.
738L(3)
The company must not make the CSF offer otherwise than in accordance with subsections (1) and (2).
738L(4)
This section does not prevent the CSF offer from being advertised or publicised in a way that does not contravene subsection 738ZG(1) .
738L(5)
The responsible intermediary for the CSF offer is the CSF intermediary referred to in subsection (1).
738L(6)
The offer platform for the CSF offer is the platform on which the CSF offer document is published as referred to in subsection (1).
738L(7)
The maximum subscription amount for the CSF offer is the amount specified in the CSF offer document as the maximum amount sought to be raised by the offer.
738L(8)
The minimum subscription amount for the CSF offer is the amount specified in the CSF offer document as the minimum amount sought to be raised by the offer.
SECTION 738M
CONSENTS NEEDED FOR PUBLICATION OF CSF OFFER DOCUMENT
738M(1)
The company making a CSF offer must not arrange for a CSF offer document to be published on a platform of a CSF intermediary unless each of the following persons has consented in writing to the publication of that CSF offer document on a platform of that CSF intermediary:
(a) each director of the company;
(b) each person named in the CSF offer document as a proposed director of the company.
738M(2)
If the CSF offer document for a CSF offer includes a statement by a person, or a statement said in the document to be based on a statement by a person, the company making the offer must not arrange for the document to be published on a platform of a CSF intermediary unless:
(a) the person has consented in writing to the statement being included in the document in the form and context in which it is included; and
(b) the document states that the person has given this consent; and
(c) the person has not withdrawn this consent before the company arranges for the document to be published on a platform of that CSF intermediary.
738M(3)
A company that makes a CSF offer must keep a consent required by subsection (1) or (2) for 7 years after the consent was given.
738M(4)
An offence based on subsection (1), (2) or (3) is an offence of strict liability.
SECTION 738N
MEANING OF MADE, OPEN, CLOSED, SUSPENDED AND COMPLETE
When a CSF offer is made
738N(1)
A CSF offer is made at the time when a CSF offer document for the offer is first published on a platform of the responsible intermediary.
When a CSF offer is open
738N(2)
A CSF offer is open during the period starting at the time when the offer is made and ending at the time when the offer is closed, but not including any part of that period while the offer is suspended.
When a CSF offer is closed
738N(3)
Subject to subsections (4) and (5) , the responsible intermediary for a CSF offer may close the offer at any time by giving notice on the offer platform that the offer is closed. If the intermediary does so, the offer is closed from the time when notice is so given on the offer platform.
738N(4)
The responsible intermediary for a CSF offer must close the offer as soon as practicable after the first of the following occurs: (a) the period of 3 months starting from when the offer was made ends; (b) if the CSF offer document specifies a period during which the offer is to be open, or a date after which the offer is no longer to be open - that period ends or that date occurs; (c) the responsible intermediary considers that the offer is fully subscribed to the maximum subscription amount for the offer; (d) the company making the offer notifies the responsible intermediary under section 738S that the company wants the offer withdrawn; (e) section 738Q prohibits the continued publication of the CSF offer document on the offer platform.
738N(5)
The hosting arrangement for a CSF offer may impose limits on the responsible intermediary ' s power to close the offer otherwise than in circumstances when the intermediary: (a) is required by subsection (4) to close the offer; or (b) is required by subsection 738X(2) to either close or suspend the offer because the CSF offer document is defective.
When a CSF offer is suspended
738N(6)
A CSF offer is suspended during the period of any suspension of the offer under section 738X (responsible intermediary ' s obligations on becoming aware that CSF offer document is defective).
When a CSF offer is complete
738N(7)
A CSF offer is complete if: (a) the offer is closed because of paragraph (4)(a) , (b) or (c) ; and (b) all periods within which people could withdraw applications made pursuant to the offer have ended; and (c) the applications that have been received by the responsible intermediary and that have not been withdrawn or rejected represent at least the minimum subscription amount for the offer.
SECTION 738P
CSF OFFER DOCUMENT TO BE REMOVED FROM OFFER PLATFORM IF OFFER CLOSES IN CERTAIN CIRCUMSTANCES
738P(1)
If a CSF offer is closed otherwise than because of paragraph 738N(4)(a) , (b) or (c), the responsible intermediary must remove the CSF offer document from the offer platform.
738P(2)
If a CSF offer is closed because of paragraph 738N(4)(a) , (b) or (c), the responsible intermediary may (but is not required to) remove the CSF offer document from the offer platform.
SECTION 738Q
GATEKEEPER OBLIGATIONS OF CSF INTERMEDIARIES
CSF intermediary to conduct checks before publishing CSF offer document
738Q(1)
A CSF intermediary must not publish a CSF offer document (or a document that purports to be a CSF offer document) on a platform of the intermediary unless the intermediary has, before starting to publish the document, conducted the checks prescribed by the regulations to a reasonable standard.
738Q(2)
For the purposes of this section, the regulations may prescribe what constitutes a reasonable standard in relation to all or any of the checks.
738Q(3)
An offence based on subsection (1) is an offence of strict liability.
738Q(4)
For the purpose of a provision of this Part that refers to a matter that a CSF intermediary knows, has reason to believe or is satisfied or not satisfied, if:
(a) a CSF intermediary contravenes subsection (1) by not conducting a check (or by not conducting a check to a reasonable standard); and
(b) had the intermediary conducted the check (or conducted it to a reasonable standard), the intermediary would have known or had reason to believe the matter, or would have been satisfied or not satisfied in relation to the matter;
CSF intermediary not to publish CSF offer document if not satisfied of certain matters etc.
738Q(5)
A CSF intermediary must not publish a CSF offer document (or a document that purports to be a CSF offer document) on a platform of the intermediary, or continue to publish such a document while the offer is open, if:
(a) the intermediary is not satisfied as to the identity of the company making the offer, or of any of the directors or other officers of the company; or
(b) the intermediary has reason to believe that any of the directors or other officers of the company are not of good fame or character; or
(c) subject to subsection (6) - the intermediary has reason to believe that the company, or a director or other officer of the company, has, in relation to the offer, knowingly engaged in conduct that is misleading or deceptive or likely to mislead or deceive; or
(d) the intermediary has reason to believe that the offer to which the document relates is not eligible to be made under this Part.
738Q(6)
In the case of a CSF offer document that has already started to be published on a platform of a CSF intermediary, paragraph (5)(c) does not apply in relation to there being a misleading or deceptive statement, an omission, or a new circumstance, that renders the document defective (as defined in section 738U ).
CSF intermediary to have adequate arrangements to ensure compliance with gatekeeper obligations
738Q(7)
A CSF intermediary must have in place adequate arrangements, recorded in writing, to ensure compliance with its obligations under subsections (1) and (5).
SECTION 738R
COMPANY AND RELATED PARTIES NOT TO HAVE MORE THAN ONE CSF OFFER OPEN AT ANY ONE TIME
738R(1)
A company must not make a CSF offer at a time when another CSF offer previously made by the company, or by a related party of the company, is open or suspended.
738R(2)
A company must not make a CSF offer at the same time as the company, or a related party of the company, makes another CSF offer.
SECTION 738S
738S
COMPANY MAY NOTIFY RESPONSIBLE INTERMEDIARY THAT IT WANTS CSF OFFER WITHDRAWN
The company making a CSF offer may, at any time before the offer is complete, notify the responsible intermediary that the company wants the offer withdrawn.
SECTION 738T
738T
WITHDRAWAL OF APPLICATIONS MADE PURSUANT TO CSF OFFER
A person who has made an application pursuant to a CSF offer may withdraw the application:
(a) as permitted by section 738X (responsible intermediary ' s obligations on becoming aware that CSF offer document is defective) or 738ZD (cooling-off rights for retail clients); or
(b) in any other circumstances allowed by the responsible intermediary, and in accordance with any requirements of the intermediary for withdrawal in those circumstances.
Division 4
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Defective etc. CSF offer documents
SECTION 738U
MEANING OF DEFECTIVE
738U(1)
A CSF offer document is defective if: (a) the CSF offer document contains a misleading or deceptive statement; or (b) there is an omission from the CSF offer document of information required by section 738J ; or (c) since the document was first published on a platform of a CSF intermediary, a new circumstance has arisen that would have been required by section 738J to be included in the document if it had arisen before the document was so published.
738U(2)
For the purposes of this section, a person is taken to make a misleading statement about a future matter (including the doing of, or refusing to do, an act) if the person does not have reasonable grounds for making the statement. This subsection does not limit the meaning of a reference to a misleading statement.
SECTION 738V
OBLIGATION TO NOTIFY COMPANY MAKING OFFER, AND RESPONSIBLE INTERMEDIARY, IF CSF OFFER DOCUMENT IS DEFECTIVE
738V(1)
If, while a CSF offer is open, the company making the offer becomes aware that the CSF offer document is defective, the company must notify the responsible intermediary as soon as practicable.
738V(2)
If, while a CSF offer is open, the responsible intermediary becomes aware that the CSF offer document is defective, the intermediary must notify the company making the offer as soon as practicable.
738V(3)
If, while a CSF offer is open, any other person referred to in the table in subsection 738Y(5) becomes aware that the CSF offer document is defective, the person must notify the company making the offer, and the responsible intermediary, as soon as practicable.
738V(4)
An offence based on subsection (1), (2) or (3) is an offence of strict liability.
SECTION 738W
COMPANY MAY PROVIDE REPLACEMENT OR SUPPLEMENTARY CSF DOCUMENT IN CERTAIN CIRCUMSTANCES
When company may provide a replacement or supplementary CSF offer document
738W(1)
The company making a CSF offer may provide the responsible intermediary with a supplementary CSF offer document, or a replacement CSF offer document, to supplement or replace the CSF offer document (the affected offer document ) as provided for in the following paragraphs:
(a) if the company becomes aware that the affected offer document is defective, the company may provide a supplementary CSF offer document, or a replacement CSF offer document, that corrects the defect;
(b) if the company becomes aware that the affected offer document does not comply with section 738K (other requirements for CSF offer documents), the company may provide a supplementary CSF offer document, or a replacement CSF offer document, that corrects the non-compliance;
(c) the company may provide a supplementary CSF offer document, or a replacement CSF offer document, in any other circumstances permitted by the regulations, and in accordance with any conditions prescribed by those regulations.
738W(2)
A supplementary CSF offer document or a replacement CSF offer document:
(a) must not be provided otherwise than as permitted by subsection (1); and
(b) if it is provided as permitted by paragraph (1)(a) or (b) - must not incorporate any changes made otherwise than:
(c) if it is provided as permitted by paragraph (1)(c) - must comply with any conditions imposed by regulations made for the purpose of that paragraph.
Form of supplementary or replacement CSF offer document
738W(3)
At the beginning of a supplementary CSF document, there must be:
(a) a statement that it is a supplementary CSF offer document; and
(b) an identification of the affected offer document it supplements; and
(c) a statement that it is to be read together with the affected offer document.
738W(4)
At the beginning of a replacement CSF offer document, there must be:
(a) a statement that it is a replacement CSF offer document; and
(b) an identification of the affected offer document it replaces.
Responsible intermediary may publish supplementary or replacement CSF offer document on offer platform
738W(5)
If, in accordance with this section, the company making a CSF offer provides the responsible intermediary with a supplementary CSF offer document or a replacement CSF offer document, then subject to subsection (6), the intermediary may:
(a) in the case of a supplementary CSF offer document - publish the supplementary CSF offer document on the offer platform (together with the affected offer document); or
(b) in the case of a replacement CSF offer document - substitute the replacement offer document for the affected offer document on the offer platform.
738W(6)
The following provisions apply in relation to a supplementary CSF offer document or a replacement CSF offer document in the same way as they apply to any CSF offer document:
(a) section 738M (consents needed for publication of CSF offer document);
(b) section 738Q (gatekeeper obligations of CSF intermediaries).
738W(7)
However, subsection 738M(2) does not apply so as to require a fresh consent to be obtained in relation to a statement if the supplementary CSF offer document, or replacement CSF offer document, does not make any material change to either the form of the statement as it was included in the affected offer document, or the context in which it was included.
Consequences of publication of a supplementary CSF offer document
738W(8)
If a supplementary CSF offer document for a CSF offer is published on the offer platform, then, for the purposes of the application of this Chapter to events that occur after that document is first published on the platform, the CSF offer document is taken to be the affected offer document together with the supplementary CSF offer document.
Consequences of publication of a replacement CSF offer document
738W(9)
If a replacement CSF offer document for a CSF offer is published on the offer platform, then, for the purposes of the application of this Chapter to events that occur after that document is first published on the platform, the CSF offer document is taken to be the replacement CSF offer document.
SECTION 738X
RESPONSIBLE INTERMEDIARY
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S OBLIGATIONS ON BECOMING AWARE THAT CSF OFFER DOCUMENT IS DEFECTIVE
When this section applies
738X(1)
This section applies if the responsible intermediary for a CSF offer becomes aware, while the offer is open, that the CSF offer document is defective.
Responsible intermediary must suspend or close the CSF offer
738X(2)
The responsible intermediary must, as soon as practicable:
(a) remove the CSF offer document from the offer platform; and
(b) either:
738X(3)
If the responsible intermediary suspends the offer, the notice required by subparagraph (2)(b)(ii) must continue to appear on the offer platform until the suspension ends (see subsection (6)) or the offer closes.
738X(4)
An offence based on subsection (2) or (3) is an offence of strict liability.
Consequences of publication of supplementary or replacement CSF offer document
738X(5)
Subsections (6) and (7) apply if:
(a) for the purpose of correcting the defect in the CSF offer document, the company making the CSF offer provides the responsible intermediary with a supplementary CSF offer document or a replacement CSF offer document; and
(b) the responsible intermediary publishes the supplementary CSF offer document or replacement CSF offer document on the offer platform.
738X(6)
If the CSF offer has been suspended, the suspension of the CSF offer ends when the supplementary CSF offer document or replacement CSF offer document is first published on the offer platform.
738X(7)
The responsible intermediary must, as soon as practicable after the supplementary CSF offer document or replacement CSF offer document is first published on the offer platform, give each person who has already applied pursuant to the CSF offer a written notice, accompanied by that document, advising the person that they may, within 14 days after the date of the notice, withdraw their application and be repaid.
738X(8)
An offence based on subsection (7) is an offence of strict liability.
738X(9)
A person who is given a notice under subsection (7) may, within 14 days after the date of the notice, withdraw their application. The withdrawal must be by notice in writing to the responsible intermediary.
SECTION 738Y
OTHER LIABILITIES RELATING TO DEFECTIVE CSF OFFER DOCUMENTS
Obligations giving rise to liabilities
738Y(1)
A company must not offer securities under a CSF offer document if the document is defective.
738Y(2)
For the purposes of subsection (1), a company is taken tooffer securities under a CSF offer document at all times, before the offer is closed, when the offer document is published on a platform of a CSF intermediary.
738Y(3)
A CSF intermediary must not publish (or continue to publish) a CSF offer document on a platform of the intermediary if:
(a) the document is defective; and
(b) the intermediary knows that the document is defective.
Criminal liability
738Y(4)
A person commits an offence if:
(a) the person contravenes subsection (1) or (3) in relation to a defective CSF offer document; and
(b) the statement, omission or new circumstance because of which the document is defective is materially adverse from the point of view of an investor.
Right to recover loss or damage
738Y(5)
A person who suffers loss or damage because an offer of securities under a CSF offer document contravenes subsection (1) may recover the amount of the loss or damage from a person referred to in the following table if the loss or damage is one that the table makes the person liable for. This is so even if the person did not commit, and was not involved in, the contravention.
738Y(6)
An action under subsection (5) may be begun at any time within 6 years after the day the cause of action arose.
SECTION 738Z
EXCEPTIONS TO LIABILITY UNDER SECTION 738Y
Lack of knowledge
738Z(1)
A person:
(a) does not commit an offence against subsection 738Y(4) in respect of a contravention of subsection 738Y(1) that relates to a CSF offer document; and
(b) is not liable under subsection 738Y(5) in respect of a contravention of subsection 738Y(1) that relates to a CSF offer document;
738Z(2)
Subsection (1) does not apply to a liability of a CSF intermediary that is covered by item 7 of the table in subsection 738Y(5) .
Reasonable reliance on information given by someone else - statements and omissions
738Z(3)
A person does not commit an offence against subsection 738Y(4) in respect of a contravention of subsection 738Y(1) , and is not liable under subsection 738Y(5) in respect of a contravention of subsection 738Y(1) , because of a misleading or deceptive statement in, or an omission from, a CSF offer document if the person placed reasonable reliance on information given to them by:
(a) if the person is a body - someone other than a director, employee or agent of the body; or
(b) if the person is an individual - someone other than an employee or agent of the individual.
738Z(4)
Subsection (3) does not apply to a liability of a CSF intermediary that is covered by item 7 of the table in subsection 738Y(5) .
738Z(5)
For the purposes of subsection (3), a person is not the agent of a body or individual merely because they perform a particular professional or advisory function for the body or individual.
Withdrawal of consent - statements and omissions
738Z(6)
A person who is named in a CSF offer document as:
(a) being a proposed director or underwriter; or
(b) making a statement included in the document; or
(c) making a statement on the basis of which a statement is included in the document;
Division 5
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Other obligations of CSF intermediaries
SECTION 738ZA
GENERAL OBLIGATIONS OF CSF INTERMEDIARIES RELATING TO THEIR PLATFORMS ETC.
The general CSF risk warning
738ZA(1)
The responsible intermediary for a CSF offer must ensure that the general CSF risk warning appears prominently on the offer platform at all times while the offer is open or suspended.
738ZA(2)
The general CSF risk warning is a statement in the terms specified in the regulations.
Providing a facility for the making of applications
738ZA(3)
The responsible intermediary for a CSF offer must ensure that:
(a) at all times while the offer is open, a facility (the application facility ) is provided for the making of applications pursuant to the CSF offer; and
(b) a retail client cannot make an application pursuant to the CSF offer by means of the application facility unless the person completes an acknowledgement that complies with the requirements of the regulations; and
(c) a person cannot make an application pursuant to the CSF offer by means of the application facility while the offer is suspended or after it has closed.
738ZA(4)
The responsible intermediary for a CSF offer must reject any application for the issue of securities pursuant to the offer if the application is made otherwise than by means of the application facility.
Providing a communication facility
738ZA(5)
The responsible intermediary for a CSF offer must, at all times while the offer is open or suspended, provide a facility (the communication facility ) that can be used for the following purposes:
(a) for people who access the CSF offer document through the offer platform:
(b) for the company or the intermediary to make posts responding to questions and posts.
738ZA(6)
If a person who makes a post using the communication facility is an officer, employee or agent of:
(a) the company making the CSF offer, or a related party of the company; or
(b) the responsible intermediary, or an associate of the intermediary;
738ZA(7)
The regulations may make provision in relation to the operation, management or use of the communication facility.
Cooling-off rights
738ZA(8)
The responsible intermediary for a CSF offer must ensure that the following appear prominently on the offer platform at all times while the offer is open or suspended:
(a) a statement drawing attention to the rights of persons under section 738ZD to withdraw applications;
(b) a statement specifying a method by which a person may exercise a right under that section to withdraw an application.
Disclosure of fees and interests
738ZA(9)
The responsible intermediary for a CSF offer must ensure that the following appear prominently on the offer platform at all times while the offer is open or suspended:
(a) the fees the intermediary charges the company making the offer;
(b) a disclosure of any direct or indirect pecuniary interest that the intermediary, or an associate of the intermediary, has or expects to acquire in the company or a related party of the company.
SECTION 738ZB
RESPONSIBLE INTERMEDIARY
'
S OBLIGATIONS RELATING TO APPLICATION MONEY
Usual obligations of financial services licensees apply subject to this section
738ZB(1)
Subdivision A of Division 2 of Part 7.8, and the other relevant provisions in Part 7.8, apply in relation to money ( application money ) that is received by the responsible intermediary for a CSF offer in respect of applications made pursuant to the offer, subject to the following provisions of this section.
Obligation to pay application money to company if offer is complete and securities have been issued
738ZB(2)
If the CSF offer is complete and the company making the offer has issued securities pursuant to the offer, the responsible intermediary must, as soon as practicable, pay to the company the application money it received for the issue of those securities, less any amount that the intermediary is entitled to retain under the hosting arrangement.
Obligation to repay application money to applicants incertain circumstances
738ZB(3)
If:
(a) the CSF offer is closed otherwise than because of paragraph 738N(4)(a) , (b) or (c); or
(b) the CSF offer is closed because of paragraph 738N(4)(a) , (b) or (c) and the following conditions are met:
738ZB(4)
If:
(a) a person who has made an application pursuant to the CSF offer withdraws that application; or
(b) an application made by a person pursuant to the CSF offer is rejected, or is unsuccessful, for any other reason;
738ZB(5)
An offence based on subsection (2), (3) or (4) is an offence of strict liability.
Division 6
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Additional protections for retail clients
SECTION 738ZC
CAPS ON INVESTMENT BY RETAIL CLIENTS PURSUANT TO CSF OFFERS
738ZC(1)
The responsible intermediary for a CSF offer must reject an application made by a person pursuant to the offer if:
(a) the person is a retail client in relation to the offer; and
(b) having regard only to CSF offers for which the intermediary is the responsible intermediary, the application would result in the total amount paid or payable by the person in respect of applications made by the person, in any period of 12 months, pursuant to CSF offers made by the same company, exceeding:
738ZC(2)
If 2 or more persons (the joint applicants ) make a joint application for the issue of securities pursuant to a CSF offer, then, unless the regulations provide otherwise, this section applies in relation to the joint application as if each of the joint applicants had instead made a separate application for a number of securities worked out by dividing the number of securities applied for in the joint application by the number of joint applicants.
SECTION 738ZD
COOLING-OFF RIGHTS FOR RETAIL CLIENTS
738ZD(1)
If a person who is a retail client in relation to a CSF offer makes an application pursuant to the offer, the person may withdraw the application within 5 business days after the application is made.
738ZD(2)
A withdrawal of an application pursuant to subsection (1) can only be made by a method specified on the offer platform as required by paragraph 738ZA(8)(b) .
SECTION 738ZE
COMPANY MAKING CSF OFFER OR CSF INTERMEDIARY ETC. MUST NOT FINANCIALLY ASSIST RETAIL CLIENT TO ACQUIRE SECURITIES
738ZE(1)
This section applies to the following persons in relation to a CSF offer made by a company or that a company intends to make:
(a) the company;
(b) a related party of the company;
(c) a CSF intermediary that is or intends to be the responsible intermediary in relation to the CSF offer;
(d) an associate of such a CSF intermediary.
738ZE(2)
A person to whom this section applies must not:
(a) financially assist a person who is a retail client in relation to the CSF offer to acquire securities pursuant to the offer; or
(b) arrange financial assistance for such a person to acquire securities pursuant to the CSF offer.
738ZE(3)
Without limiting subsection (2), the prohibition on financial assistance:
(a) applies whether the financial assistance is provided or arranged before or after the acquisition of securities pursuant to the CSF offer; and
(b) extends to the provision of financial assistance in the form of a dividend.
738ZE(4)
In this section,
Division 7
-
Other matters
SECTION 738ZF
738ZF
OFFERING SECURITIES OF A COMPANY THAT DOES NOT EXIST
A person must not make an offer that:
(a) is expressed to be made under this Part; and
(b) relates to a company that has not been formed or does not exist.
SECTION 738ZG
RESTRICTIONSON ADVERTISING AND PUBLICITY
Prohibition
738ZG(1)
A person must not: (a) advertise a CSF offer or an intended CSF offer; or (b) publish a statement that:
738ZG(2)
None of the following constitutes advertising a CSF offer, or publishing a statement, as mentioned in subsection (1) : (a) the publication of a CSF offer or a CSF offer document (or both), or any other information relating to a CSF offer, on a platform of the responsible intermediary; (b) an advertisement or publication that does not refer to any particular CSF offer or intended CSF offer, and that does either or both of the following:
738ZG(3)
In deciding for the purposes of subsection (1) whether a statement: (a) indirectly refers to a CSF offer, or intended CSF offer, of securities; or (b) is reasonably likely to induce people to apply for securities pursuant to a CSF offer or an intended CSF offer;
738ZG(4)
Subsection (1) does not apply if any of subsections (6) to (9) provide that the advertisement or publication does not contravene subsection (1) .
738ZG(5)
An offence based on subsection (1) is an offence of strict liability.
Exception for publicising CSF offer or intended CSF offer
738ZG(6)
An advertisement or publication that refers to a CSF offer or an intended CSF offer does not contravene subsection (1) if the advertisement or publication states that a person should, in deciding whether to make an application pursuant to the offer, consider the CSF offer document for the offer and the general CSF risk warning (whether or not the advertisement or publication also contains other material).
Exception for publishers
738ZG(7)
A person does not contravene subsection (1) by publishing an advertisement or statement if the person: (a) publishes it in the ordinary course of a media business; and (b) did not know, and had no reason to suspect, that its publication would amount to a contravention of subsection (1) .
Exception for statements made on communication facility for CSF offer
738ZG(8)
A statement made in good faith on the communication facility for a CSF offer does not contravene subsection (1) .
Other general exceptions
738ZG(9)
An advertisement or publication does not contravene subsection (1) in relation to a CSF offer, or an intended CSF offer, if it: (a) consists solely of a notice or report of a general meeting of the company making, or intending to make, the offer; or (b) consists solely of a report about the company making, or intending to make, the CSF offer that is published by the company and:
Meaning of media
738ZG(10)
For the purposes of this section, the media consists of: (a) newspapers and magazines; and (b) radio and television broadcasting services; and (c) electronic services (including services provided through the internet) that:
SECTION 738ZH
738ZH
LIABILITIES UNDER OTHER LAWS NOT AFFECTED
This Part does not affect any liability that a person has under any other law.
SECTION 738ZI
COMPANIES ELIGIBLE FOR LIMITED GOVERNANCE REQUIREMENTS
7389ZI(1)
A company is covered under this section at a particular time if:
(a) the company:
(b) the application made in relation to the company ' s registration or conversion stated that:
(c) the company is an eligible CSF company at that time; and
(d) the time is within 5 years after the company ' s registration as, or conversion to, a public company limited by shares; and
(e) if the time is at or after the end of a financial year that ends later than 12 months after the company ' s registration as, or conversion to, a public company limited by shares - the company has completed a CSF offer at that time; and
(f) the company has been covered under this section at all times since its registration as, or conversion to, a public company limited by shares; and
(g) as at that time, the company has not made any offers of securities for issue or sale that need disclosure to investors under Part 6D.2 .
738ZI(2)
In this section:
SECTION 738ZJ
738ZJ
REGULATIONS RELATING TO HOW CSF INTERMEDIARIES ARE TO DEAL WITH APPLICATIONS
The regulations may make provision relating to how CSF intermediaries are to deal with applications made pursuant to CSF offers, including (but not limited to) the following:
(a) the order in which applications are to be dealt with;
(b) circumstances in which applications must or may be rejected;
(c) when applications are to be counted towards the maximum subscription amount, or the minimum subscription amount, in relation to a CSF offer.
SECTION 738ZK
RELATED PARTY TRANSACTIONS
-
PROPRIETARY COMPANIES THAT HAVE ONE OR MORE CSF SHAREHOLDERS
Chapter 2E applies to a proprietary company that has one or more CSF shareholders as if references to a public company were instead references to such a proprietary company.
View history note
Hide history noteThe object of this Part is to provide a disclosure regime that can be used for certain offers of securities for issue in small unlisted companies, instead of complying with the requirements of Part 6D.2 .
A CSF offer is an offer that is:
(a) eligible to be made under this Part (see Division 2); and
(b) expressed to be made under this Part.
A CSF intermediary is a financial services licensee whose licence expressly authorises the licensee to provide a crowd funding service.
Note: Because a CSF intermediary is a financial services licensee, the intermediary must (in addition to complying with this Part) comply with the provisions of Chapter 7 that apply to financial services licensees.
If a person (not being the company making the CSF offer) is a retail client in relation to the provision of a crowd-funding service that relates to a particular CSF offer, then, for the purposes of this Part, the person is a retail client in relation to that CSF offer.
The fact that a company makes a CSF offer of securities does not prevent the company from also making an offer, in reliance on a provision of section 708 , of securities that are of the same class as those offered under the CSF offer.
Subject to subsections (2) and (3), the following provisions of Chapter 7 (the applied provisions ) have effect for the purposes of this Part as if references in the provisions to that Chapter were instead references to this Part:
(a) section 761F (meaning of person - generally includes a partnership);
(b) section 761FA (meaning of person - generally includes multiple trustees);
(c) section 769B (people are generally responsible for the conduct of agents, employees etc.).
738F(2)
Subsection (1) does not apply to provisions of the sections mentioned in subsection (1) that are expressed to relate only to specific provisions of Chapter 7 or to specific Parts, Divisions or Subdivisions of Chapter 7.
738F(3)
The regulations may provide that one or more of the applied provisions have effect for specified purposes subject to modifications specified in the regulations. The regulations have effect accordingly.
An offer is eligible to be made under this Part if:
(a) it is an offer by a company for the issue of securities of the company; and
(b) the company is an eligible CSF company (see section 738H ) at the time when the offer is made; and
(c) the securities are of a class specified in the regulations; and
(d) the offer complies with the issuer cap (see subsection (2) of this section); and
(e) the funds sought to be raised by the offer are not intended by the company to be used, to any extent, by the company or a related party of the company, to invest in securities or interests in other entities or schemes; and
(f) any other requirements specified in the regulations are satisfied in relation to the securities or the offer.
Note: If an offer of securities is expressed to be made under this Part but is not eligible to be made under this Part, ASIC may make a stop order under section 739 .
The issuer cap
738G(2)
For the purpose of this section, an offer of securities for issue in a company (the new offer ) complies with the issuer cap if the total of:
(a) the maximum amount sought to be raised by the new offer; and
(b) all amounts raised, in the period of 12 months before the time when the new offer is made, pursuant to CSF offers that were made in that period by the company or by related parties of the company; and
(c) all amounts raised, in the period of 12 months before the time when the new offer is made, pursuant to offers made by the company, or by related parties of the company, that did not need disclosure because of subsection 708(1) or (10) ;
does not exceed:
(d) $5 million; or
(e) if the regulations prescribe a different amount - the prescribed amount.
Note: Amounts raised by CSF offers that were made before the start of the 12 month period referred to in paragraph (2)(b) are not to be counted. For when a CSF offer is made , see subsection 738N(1) .
Meaning of related party
738G(3)
For the purposes of this Part, each of the following is a related party of a company:
(a) a related body corporate of the company;
(b) an entity controlled by:
(i) a person who controls the company; or
(ii) an associate of that person.
A company is an eligible CSF company at a particular time (the test time ) if all of the following conditions are satisfied in relation to the company at the test time:
(a) the company is a public company limited by shares, or the company is a proprietary company that:
(i) has at least 2 directors; and
(ii) meets all the other requirements (if any) prescribed by the regulations for the purposes of this subparagraph;
(b) the company ' s principal place of business is in Australia;
(c) a majority of the company ' s directors (not counting alternate directors) ordinarily reside in Australia;
(d) the company complies with the assets and turnover test (see subsection (2));
(e) neither the company, nor any related party of the company, is:
(i) a listed corporation; or
(ii) included in an official list of a financial market operated outside this jurisdiction;
(f) neither the company, nor any related party of the company, has a substantial purpose of investing in securities or interests in other entities or schemes.
The assets and turnover test
738H(2)
The company complies with the assets and turnover test at the test time if:
(a) the value of the consolidated gross assets of the company, and of all its related parties is less than:
(i) $25 million; or
(ii) if the regulations prescribe a different amount - the prescribed amount; and
(b) the consolidated annual revenue of the company, and of all its related parties, is less than:
(i) $25 million; or
(ii) if the regulations prescribe a different amount - the prescribed amount.
A document (a CSF offer document ) must be prepared for a CSF offer.
738J(2)
A CSF offer document for a CSF offer must contain the information required by the regulations. The document may also set out the CSF offer.
Note: See also subsections 738W(8) and (9) about the effect of supplementary or replacement CSF offer documents.
SECTION 738K 738K OTHER REQUIREMENTS FOR CSF OFFER DOCUMENT
The information in a CSF offer document must be worded and presented in a clear, concise and effective manner. The document must also comply with any other requirements prescribed by the regulations.
Note 1: If this section is contravened, ASIC may make a stop order under section 739 .
Note 2: See also subsections 738W(8) and (9) about the effect of supplementary or replacement CSF offer documents.
A CSF offer of a company ' s securities must be made by publishing, on a platform of a single CSF intermediary, a CSF offer document that complies with section 738J . If the CSF offer document does not set out the CSF offer, the CSF offer must be published together with the offer document.
Note 1: Section 1309 creates offences for providing false or misleading information to CSF intermediaries.
Note 2: See also section 738Q (gatekeeper obligations of CSF intermediaries).
738L(2)
The arrangement (the hosting arrangement ) between the company and the CSF intermediary for the publication of the CSF offer document must require all applications made in response to the offer, and all application money in respect of such applications, to be sent or paid to the intermediary and dealt with by the intermediary in accordance with this Part.
Note: See also section 738ZB (which deals with the responsible intermediary ' s obligations in relation to application money).
738L(3)
The company must not make the CSF offer otherwise than in accordance with subsections (1) and (2).
Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).
738L(4)
This section does not prevent the CSF offer from being advertised or publicised in a way that does not contravene subsection 738ZG(1) .
738L(5)
The responsible intermediary for the CSF offer is the CSF intermediary referred to in subsection (1).
738L(6)
The offer platform for the CSF offer is the platform on which the CSF offer document is published as referred to in subsection (1).
738L(7)
The maximum subscription amount for the CSF offer is the amount specified in the CSF offer document as the maximum amount sought to be raised by the offer.
738L(8)
The minimum subscription amount for the CSF offer is the amount specified in the CSF offer document as the minimum amount sought to be raised by the offer.
The company making a CSF offer must not arrange for a CSF offer document to be published on a platform of a CSF intermediary unless each of the following persons has consented in writing to the publication of that CSF offer document on a platform of that CSF intermediary:
(a) each director of the company;
(b) each person named in the CSF offer document as a proposed director of the company.
Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).
738M(2)
If the CSF offer document for a CSF offer includes a statement by a person, or a statement said in the document to be based on a statement by a person, the company making the offer must not arrange for the document to be published on a platform of a CSF intermediary unless:
(a) the person has consented in writing to the statement being included in the document in the form and context in which it is included; and
(b) the document states that the person has given this consent; and
(c) the person has not withdrawn this consent before the company arranges for the document to be published on a platform of that CSF intermediary.
Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).
738M(3)
A company that makes a CSF offer must keep a consent required by subsection (1) or (2) for 7 years after the consent was given.
Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).
738M(4)
An offence based on subsection (1), (2) or (3) is an offence of strict liability.
When a CSF offer is made
738N(1)
A CSF offer is made at the time when a CSF offer document for the offer is first published on a platform of the responsible intermediary.
When a CSF offer is open
738N(2)
A CSF offer is open during the period starting at the time when the offer is made and ending at the time when the offer is closed, but not including any part of that period while the offer is suspended.
When a CSF offer is closed
738N(3)
Subject to subsections (4) and (5) , the responsible intermediary for a CSF offer may close the offer at any time by giving notice on the offer platform that the offer is closed. If the intermediary does so, the offer is closed from the time when notice is so given on the offer platform.
Note: See also section 738P (which deals with removal of a CSF offer document from the offer platform) and section 738ZB (which deals with the responsible intermediary ' s obligations in relation to application money).
738N(4)
The responsible intermediary for a CSF offer must close the offer as soon as practicable after the first of the following occurs: (a) the period of 3 months starting from when the offer was made ends; (b) if the CSF offer document specifies a period during which the offer is to be open, or a date after which the offer is no longer to be open - that period ends or that date occurs; (c) the responsible intermediary considers that the offer is fully subscribed to the maximum subscription amount for the offer; (d) the company making the offer notifies the responsible intermediary under section 738S that the company wants the offer withdrawn; (e) section 738Q prohibits the continued publication of the CSF offer document on the offer platform.
Note 1: Failure to comply with this subsection is an offence (see subsection 1311(1) ).
Note 2: See also subsection 738X(2) , which requires the responsible intermediary to either close or suspend the CSF offer if the intermediary becomes aware that the CSF offer document is defective.
738N(5)
The hosting arrangement for a CSF offer may impose limits on the responsible intermediary ' s power to close the offer otherwise than in circumstances when the intermediary: (a) is required by subsection (4) to close the offer; or (b) is required by subsection 738X(2) to either close or suspend the offer because the CSF offer document is defective.
When a CSF offer is suspended
738N(6)
A CSF offer is suspended during the period of any suspension of the offer under section 738X (responsible intermediary ' s obligations on becoming aware that CSF offer document is defective).
When a CSF offer is complete
738N(7)
A CSF offer is complete if: (a) the offer is closed because of paragraph (4)(a) , (b) or (c) ; and (b) all periods within which people could withdraw applications made pursuant to the offer have ended; and (c) the applications that have been received by the responsible intermediary and that have not been withdrawn or rejected represent at least the minimum subscription amount for the offer.
Note: For when applications can be withdrawn, see section 738T .
[ CCH Note: There is no s 738O]
If a CSF offer is closed otherwise than because of paragraph 738N(4)(a) , (b) or (c), the responsible intermediary must remove the CSF offer document from the offer platform.
Note 1: Failure to comply with this subsection is an offence (see subsection 1311(1) ).
Note 2: For removal of the CSF offer document for a CSF offer if the offer is suspended, see subsection 738X(2) .
738P(2)
If a CSF offer is closed because of paragraph 738N(4)(a) , (b) or (c), the responsible intermediary may (but is not required to) remove the CSF offer document from the offer platform.
CSF intermediary to conduct checks before publishing CSF offer document
738Q(1)
A CSF intermediary must not publish a CSF offer document (or a document that purports to be a CSF offer document) on a platform of the intermediary unless the intermediary has, before starting to publish the document, conducted the checks prescribed by the regulations to a reasonable standard.
Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).
738Q(2)
For the purposes of this section, the regulations may prescribe what constitutes a reasonable standard in relation to all or any of the checks.
738Q(3)
An offence based on subsection (1) is an offence of strict liability.
738Q(4)
For the purpose of a provision of this Part that refers to a matter that a CSF intermediary knows, has reason to believe or is satisfied or not satisfied, if:
(a) a CSF intermediary contravenes subsection (1) by not conducting a check (or by not conducting a check to a reasonable standard); and
(b) had the intermediary conducted the check (or conducted it to a reasonable standard), the intermediary would have known or had reason to believe the matter, or would have been satisfied or not satisfied in relation to the matter;
then the matter is taken to be one that the intermediary knows or has reason to believe, or in relation to which the intermediary is satisfied or not satisfied (as the case requires).
CSF intermediary not to publish CSF offer document if not satisfied of certain matters etc.
738Q(5)
A CSF intermediary must not publish a CSF offer document (or a document that purports to be a CSF offer document) on a platform of the intermediary, or continue to publish such a document while the offer is open, if:
(a) the intermediary is not satisfied as to the identity of the company making the offer, or of any of the directors or other officers of the company; or
(b) the intermediary has reason to believe that any of the directors or other officers of the company are not of good fame or character; or
(c) subject to subsection (6) - the intermediary has reason to believe that the company, or a director or other officer of the company, has, in relation to the offer, knowingly engaged in conduct that is misleading or deceptive or likely to mislead or deceive; or
(d) the intermediary has reason to believe that the offer to which the document relates is not eligible to be made under this Part.
Note 1: The CSF intermediary must close the offer (see paragraph 738N(4)(e) ).
Note 2: The question whether a CSF intermediary is not satisfied in relation to a matter, or has reason to believe a matter, is affected by subsection (4) of this section.
Note 3: Failure to comply with this subsection is an offence (see subsection 1311(1) ).
738Q(6)
In the case of a CSF offer document that has already started to be published on a platform of a CSF intermediary, paragraph (5)(c) does not apply in relation to there being a misleading or deceptive statement, an omission, or a new circumstance, that renders the document defective (as defined in section 738U ).
Note: The consequences of a CSF offer document being defective are dealt with in Division 4. If the responsible intermediary becomes aware that the document is defective, they must remove the document from the offer platform and either close or suspend the offer (see subsection 738X(2) ).
CSF intermediary to have adequate arrangements to ensure compliance with gatekeeper obligations
738Q(7)
A CSF intermediary must have in place adequate arrangements, recorded in writing, to ensure compliance with its obligations under subsections (1) and (5).
Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).
A company must not make a CSF offer at a time when another CSF offer previously made by the company, or by a related party of the company, is open or suspended.
Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).
738R(2)
A company must not make a CSF offer at the same time as the company, or a related party of the company, makes another CSF offer.
Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).
The company making a CSF offer may, at any time before the offer is complete, notify the responsible intermediary that the company wants the offer withdrawn.
Note: The responsible intermediary must close the offer (see subsection 738N(4) ).
A person who has made an application pursuant to a CSF offer may withdraw the application:
(a) as permitted by section 738X (responsible intermediary ' s obligations on becoming aware that CSF offer document is defective) or 738ZD (cooling-off rights for retail clients); or
(b) in any other circumstances allowed by the responsible intermediary, and in accordance with any requirements of the intermediary for withdrawal in those circumstances.
Note: If an applicant withdraws their application, the responsible intermediary must return the application money (see section 738ZB ).
A CSF offer document is defective if: (a) the CSF offer document contains a misleading or deceptive statement; or (b) there is an omission from the CSF offer document of information required by section 738J ; or (c) since the document was first published on a platform of a CSF intermediary, a new circumstance has arisen that would have been required by section 738J to be included in the document if it had arisen before the document was so published.
738U(2)
For the purposes of this section, a person is taken to make a misleading statement about a future matter (including the doing of, or refusing to do, an act) if the person does not have reasonable grounds for making the statement. This subsection does not limit the meaning of a reference to a misleading statement.
If, while a CSF offer is open, the company making the offer becomes aware that the CSF offer document is defective, the company must notify the responsible intermediary as soon as practicable.
Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).
738V(2)
If, while a CSF offer is open, the responsible intermediary becomes aware that the CSF offer document is defective, the intermediary must notify the company making the offer as soon as practicable.
Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).
738V(3)
If, while a CSF offer is open, any other person referred to in the table in subsection 738Y(5) becomes aware that the CSF offer document is defective, the person must notify the company making the offer, and the responsible intermediary, as soon as practicable.
Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).
738V(4)
An offence based on subsection (1), (2) or (3) is an offence of strict liability.
When company may provide a replacement or supplementary CSF offer document
738W(1)
The company making a CSF offer may provide the responsible intermediary with a supplementary CSF offer document, or a replacement CSF offer document, to supplement or replace the CSF offer document (the affected offer document ) as provided for in the following paragraphs:
(a) if the company becomes aware that the affected offer document is defective, the company may provide a supplementary CSF offer document, or a replacement CSF offer document, that corrects the defect;
(b) if the company becomes aware that the affected offer document does not comply with section 738K (other requirements for CSF offer documents), the company may provide a supplementary CSF offer document, or a replacement CSF offer document, that corrects the non-compliance;
(c) the company may provide a supplementary CSF offer document, or a replacement CSF offer document, in any other circumstances permitted by the regulations, and in accordance with any conditions prescribed by those regulations.
Note 1: Defective CSF offer documents give rise to liabilities under section 738Y .
Note 2: Regulations for the purpose of paragraph (c) may (for example) limit the kinds of changes that may be incorporated into a supplementary or replacement CSF offer document provided under that paragraph.
Note 3: This section applies to a CSF offer document that has already been previously supplemented or replaced.
738W(2)
A supplementary CSF offer document or a replacement CSF offer document:
(a) must not be provided otherwise than as permitted by subsection (1); and
(b) if it is provided as permitted by paragraph (1)(a) or (b) - must not incorporate any changes made otherwise than:
(i) for the purpose of correcting a defect or non-compliance as mentioned in that paragraph; or
(ii) as permitted by the regulations; and
(c) if it is provided as permitted by paragraph (1)(c) - must comply with any conditions imposed by regulations made for the purpose of that paragraph.
Form of supplementary or replacement CSF offer document
738W(3)
At the beginning of a supplementary CSF document, there must be:
(a) a statement that it is a supplementary CSF offer document; and
(b) an identification of the affected offer document it supplements; and
(c) a statement that it is to be read together with the affected offer document.
738W(4)
At the beginning of a replacement CSF offer document, there must be:
(a) a statement that it is a replacement CSF offer document; and
(b) an identification of the affected offer document it replaces.
Responsible intermediary may publish supplementary or replacement CSF offer document on offer platform
738W(5)
If, in accordance with this section, the company making a CSF offer provides the responsible intermediary with a supplementary CSF offer document or a replacement CSF offer document, then subject to subsection (6), the intermediary may:
(a) in the case of a supplementary CSF offer document - publish the supplementary CSF offer document on the offer platform (together with the affected offer document); or
(b) in the case of a replacement CSF offer document - substitute the replacement offer document for the affected offer document on the offer platform.
Note: The responsible intermediary is not required to publish the supplementary or replacement CSF offer document. See also the provisions of section 738X relating to suspension or closure of CSF offers.
738W(6)
The following provisions apply in relation to a supplementary CSF offer document or a replacement CSF offer document in the same way as they apply to any CSF offer document:
(a) section 738M (consents needed for publication of CSF offer document);
(b) section 738Q (gatekeeper obligations of CSF intermediaries).
738W(7)
However, subsection 738M(2) does not apply so as to require a fresh consent to be obtained in relation to a statement if the supplementary CSF offer document, or replacement CSF offer document, does not make any material change to either the form of the statement as it was included in the affected offer document, or the context in which it was included.
Consequences of publication of a supplementary CSF offer document
738W(8)
If a supplementary CSF offer document for a CSF offer is published on the offer platform, then, for the purposes of the application of this Chapter to events that occur after that document is first published on the platform, the CSF offer document is taken to be the affected offer document together with the supplementary CSF offer document.
Consequences of publication of a replacement CSF offer document
738W(9)
If a replacement CSF offer document for a CSF offer is published on the offer platform, then, for the purposes of the application of this Chapter to events that occur after that document is first published on the platform, the CSF offer document is taken to be the replacement CSF offer document.
When this section applies
738X(1)
This section applies if the responsible intermediary for a CSF offer becomes aware, while the offer is open, that the CSF offer document is defective.
Note: See also section 738V , which imposes notification obligations in relation to defective CSF offer documents.
Responsible intermediary must suspend or close the CSF offer
738X(2)
The responsible intermediary must, as soon as practicable:
(a) remove the CSF offer document from the offer platform; and
(b) either:
(i) close the offer; or
(ii) suspend the offer by giving notice on the offer platform that the offer is suspended.
Note 1: Failure to comply with this subsection is an offence (see subsection 1311(1) ).
Note 2: See also section 738N , which deals with closure of CSF offers.
738X(3)
If the responsible intermediary suspends the offer, the notice required by subparagraph (2)(b)(ii) must continue to appear on the offer platform until the suspension ends (see subsection (6)) or the offer closes.
Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).
738X(4)
An offence based on subsection (2) or (3) is an offence of strict liability.
Consequences of publication of supplementary or replacement CSF offer document
738X(5)
Subsections (6) and (7) apply if:
(a) for the purpose of correcting the defect in the CSF offer document, the company making the CSF offer provides the responsible intermediary with a supplementary CSF offer document or a replacement CSF offer document; and
(b) the responsible intermediary publishes the supplementary CSF offer document or replacement CSF offer document on the offer platform.
738X(6)
If the CSF offer has been suspended, the suspension of the CSF offer ends when the supplementary CSF offer document or replacement CSF offer document is first published on the offer platform.
738X(7)
The responsible intermediary must, as soon as practicable after the supplementary CSF offer document or replacement CSF offer document is first published on the offer platform, give each person who has already applied pursuant to the CSF offer a written notice, accompanied by that document, advising the person that they may, within 14 days after the date of the notice, withdraw their application and be repaid.
Note 1: Failure to comply with this subsection is an offence (see subsection 1311(1) ).
Note 2: If the suspension does not end under this subsection, the responsible intermediary must return the application money when the offer closes (see section 738ZB ).
738X(8)
An offence based on subsection (7) is an offence of strict liability.
738X(9)
A person who is given a notice under subsection (7) may, within 14 days after the date of the notice, withdraw their application. The withdrawal must be by notice in writing to the responsible intermediary.
Note: If an applicant withdraws their application, the responsible intermediary must return the application money (see section 738ZB ).
Obligations giving rise to liabilities
738Y(1)
A company must not offer securities under a CSF offer document if the document is defective.
Note 1: A defect may be corrected by a supplementary CSF offer document or a replacement CSF offer document (see section 738W ).
Note 2: If this subsection is contravened, ASIC may make a stop order under section 739 .
738Y(2)
For the purposes of subsection (1), a company is taken tooffer securities under a CSF offer document at all times, before the offer is closed, when the offer document is published on a platform of a CSF intermediary.
738Y(3)
A CSF intermediary must not publish (or continue to publish) a CSF offer document on a platform of the intermediary if:
(a) the document is defective; and
(b) the intermediary knows that the document is defective.
Note 1: A defect may be corrected by a supplementary CSF offer document or a replacement CSF offer document (see section 738W ).
Note 2: The question whether a CSF intermediary knows that a document is defective is affected by subsection 738Q(4) .
Criminal liability
738Y(4)
A person commits an offence if:
(a) the person contravenes subsection (1) or (3) in relation to a defective CSF offer document; and
(b) the statement, omission or new circumstance because of which the document is defective is materially adverse from the point of view of an investor.
Note: For exceptions to liability, see section 738Z .
Right to recover loss or damage
738Y(5)
A person who suffers loss or damage because an offer of securities under a CSF offer document contravenes subsection (1) may recover the amount of the loss or damage from a person referred to in the following table if the loss or damage is one that the table makes the person liable for. This is so even if the person did not commit, and was not involved in, the contravention.
| People liable on disclosure document | |||
| Item | These people ... | are liable for loss or damage caused by ... | |
| 1 | the company making the CSF offer | any contravention of subsection (1) in relation to the CSF offer document | |
| 2 | each director of the company making the CSF offer | any contravention of subsection (1) in relation to the CSF offer document | |
| 3 | a person named in the CSF offer document with their consent as a proposed director of the company | any contravention of subsection (1) in relation to the CSF offer document | |
| 4 | an underwriter (but not a sub-underwriter) to the issue named in the CSF offer document with their consent | any contravention of subsection (1) in relation to the CSF offer document | |
| 5 | a person named in the CSF offer document with their consent as having made a statement: | the inclusion of the statement in the CSF offer document | |
| (a) | that is included in the CSF offer document; or | ||
| (b) | on which a statement made in the CSF offer document is based | ||
| 6 | a person who contravenes, or is involved in the contravention of, subsection (1) | that contravention | |
| 7 | a CSF intermediary that publishes the CSF offer document on a platform of the intermediary | a contravention of subsection (1) in relation to the CSF offer document, but only if paragraph (3)(b) is satisfied |
Note: For exceptions to liability, see section 738Z .
738Y(6)
An action under subsection (5) may be begun at any time within 6 years after the day the cause of action arose.
Lack of knowledge
738Z(1)
A person:
(a) does not commit an offence against subsection 738Y(4) in respect of a contravention of subsection 738Y(1) that relates to a CSF offer document; and
(b) is not liable under subsection 738Y(5) in respect of a contravention of subsection 738Y(1) that relates to a CSF offer document;
if the person did not know that the CSF offer document was defective.
Note: In a prosecution for an offence, a defendant bears an evidential burden in relation to the matter in this subsection (see subsection 13.3(3) of the Criminal Code ).
738Z(2)
Subsection (1) does not apply to a liability of a CSF intermediary that is covered by item 7 of the table in subsection 738Y(5) .
Reasonable reliance on information given by someone else - statements and omissions
738Z(3)
A person does not commit an offence against subsection 738Y(4) in respect of a contravention of subsection 738Y(1) , and is not liable under subsection 738Y(5) in respect of a contravention of subsection 738Y(1) , because of a misleading or deceptive statement in, or an omission from, a CSF offer document if the person placed reasonable reliance on information given to them by:
(a) if the person is a body - someone other than a director, employee or agent of the body; or
(b) if the person is an individual - someone other than an employee or agent of the individual.
Note: In a prosecution for an offence, a defendant bears an evidential burden in relation to the matter in this subsection (see subsection 13.3(3) of the Criminal Code ).
738Z(4)
Subsection (3) does not apply to a liability of a CSF intermediary that is covered by item 7 of the table in subsection 738Y(5) .
738Z(5)
For the purposes of subsection (3), a person is not the agent of a body or individual merely because they perform a particular professional or advisory function for the body or individual.
Withdrawal of consent - statements and omissions
738Z(6)
A person who is named in a CSF offer document as:
(a) being a proposed director or underwriter; or
(b) making a statement included in the document; or
(c) making a statement on the basis of which a statement is included in the document;
does not commit an offence against subsection 738Y(1) , and is not liable under subsection 738Y(5) in respect of a contravention of subsection 738Y(1) , because of a misleading or deceptive statement in, or an omission from, a CSF offer document if the person publicly withdrew their consent to being named in the document in that way.
Note: In a prosecution for an offence, a defendant bears an evidential burden in relation to the matter in this subsection (see subsection 13.3(3) of the Criminal Code ).
The general CSF risk warning
738ZA(1)
The responsible intermediary for a CSF offer must ensure that the general CSF risk warning appears prominently on the offer platform at all times while the offer is open or suspended.
Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).
738ZA(2)
The general CSF risk warning is a statement in the terms specified in the regulations.
Providing a facility for the making of applications
738ZA(3)
The responsible intermediary for a CSF offer must ensure that:
(a) at all times while the offer is open, a facility (the application facility ) is provided for the making of applications pursuant to the CSF offer; and
(b) a retail client cannot make an application pursuant to the CSF offer by means of the application facility unless the person completes an acknowledgement that complies with the requirements of the regulations; and
(c) a person cannot make an application pursuant to the CSF offer by means of the application facility while the offer is suspended or after it has closed.
Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).
738ZA(4)
The responsible intermediary for a CSF offer must reject any application for the issue of securities pursuant to the offer if the application is made otherwise than by means of the application facility.
Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).
Providing a communication facility
738ZA(5)
The responsible intermediary for a CSF offer must, at all times while the offer is open or suspended, provide a facility (the communication facility ) that can be used for the following purposes:
(a) for people who access the CSF offer document through the offer platform:
(i) to make posts relating to the offer; and
(ii) to see posts relating to the offer made by others; and
(iii) to ask the company making the offer, or the intermediary, questions relating to the offer;
(b) for the company or the intermediary to make posts responding to questions and posts.
Note 1: Failure to comply with this subsection is an offence (see subsection 1311(1) ).
Note 2: A statement made in good faith on the communication facility fora CSF offer does not contravene subsection 738ZG(1) (restrictions on advertising and publicity) (see subsection 738ZG(8) ).
738ZA(6)
If a person who makes a post using the communication facility is an officer, employee or agent of:
(a) the company making the CSF offer, or a related party of the company; or
(b) the responsible intermediary, or an associate of the intermediary;
the person must clearly disclose that fact in the post that they make.
Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).
738ZA(7)
The regulations may make provision in relation to the operation, management or use of the communication facility.
Note: For example, regulations may prohibit, or require, the removal of material from the communication facility.
Cooling-off rights
738ZA(8)
The responsible intermediary for a CSF offer must ensure that the following appear prominently on the offer platform at all times while the offer is open or suspended:
(a) a statement drawing attention to the rights of persons under section 738ZD to withdraw applications;
(b) a statement specifying a method by which a person may exercise a right under that section to withdraw an application.
Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).
Disclosure of fees and interests
738ZA(9)
The responsible intermediary for a CSF offer must ensure that the following appear prominently on the offer platform at all times while the offer is open or suspended:
(a) the fees the intermediary charges the company making the offer;
(b) a disclosure of any direct or indirect pecuniary interest that the intermediary, or an associate of the intermediary, has or expects to acquire in the company or a related party of the company.
Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).
Usual obligations of financial services licensees apply subject to this section
738ZB(1)
Subdivision A of Division 2 of Part 7.8, and the other relevant provisions in Part 7.8, apply in relation to money ( application money ) that is received by the responsible intermediary for a CSF offer in respect of applications made pursuant to the offer, subject to the following provisions of this section.
Obligation to pay application money to company if offer is complete and securities have been issued
738ZB(2)
If the CSF offer is complete and the company making the offer has issued securities pursuant to the offer, the responsible intermediary must, as soon as practicable, pay to the company the application money it received for the issue of those securities, less any amount that the intermediary is entitled to retain under the hosting arrangement.
Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).
Obligation to repay application money to applicants incertain circumstances
738ZB(3)
If:
(a) the CSF offer is closed otherwise than because of paragraph 738N(4)(a) , (b) or (c); or
(b) the CSF offer is closed because of paragraph 738N(4)(a) , (b) or (c) and the following conditions are met:
(i) all periods within which people could withdraw applications made pursuant to the offer have ended;
(ii) the applications that have been received by the intermediary and that have not been withdrawn or rejected do not represent at least the minimum subscription amount for the offer;
the responsible intermediary must, as soon as practicable, return to the applicants who made applications that have not been withdrawn or rejected all application money received in respect of those applications.
Note 1: Failure to comply with this subsection is an offence (see subsection 1311(1) ).
Note 2: For when applications can be withdrawn, see section 738T .
738ZB(4)
If:
(a) a person who has made an application pursuant to the CSF offer withdraws that application; or
(b) an application made by a person pursuant to the CSF offer is rejected, or is unsuccessful, for any other reason;
the responsible intermediary must, as soon as practicable, return to the applicant the application money received in respect of the application.
Note 1: Failure to comply with this subsection is an offence (see subsection 1311(1) ).
Note 2: For when applications can be withdrawn, see section 738T .
738ZB(5)
An offence based on subsection (2), (3) or (4) is an offence of strict liability.
The responsible intermediary for a CSF offer must reject an application made by a person pursuant to the offer if:
(a) the person is a retail client in relation to the offer; and
(b) having regard only to CSF offers for which the intermediary is the responsible intermediary, the application would result in the total amount paid or payable by the person in respect of applications made by the person, in any period of 12 months, pursuant to CSF offers made by the same company, exceeding:
(i) $10,000; or
(ii) if the regulations prescribe a different amount - the prescribed amount.
Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).
738ZC(2)
If 2 or more persons (the joint applicants ) make a joint application for the issue of securities pursuant to a CSF offer, then, unless the regulations provide otherwise, this section applies in relation to the joint application as if each of the joint applicants had instead made a separate application for a number of securities worked out by dividing the number of securities applied for in the joint application by the number of joint applicants.
If a person who is a retail client in relation to a CSF offer makes an application pursuant to the offer, the person may withdraw the application within 5 business days after the application is made.
Note: If an applicant withdraws their application, the responsible intermediary must return the application money (see section 738ZB ).
738ZD(2)
A withdrawal of an application pursuant to subsection (1) can only be made by a method specified on the offer platform as required by paragraph 738ZA(8)(b) .
This section applies to the following persons in relation to a CSF offer made by a company or that a company intends to make:
(a) the company;
(b) a related party of the company;
(c) a CSF intermediary that is or intends to be the responsible intermediary in relation to the CSF offer;
(d) an associate of such a CSF intermediary.
738ZE(2)
A person to whom this section applies must not:
(a) financially assist a person who is a retail client in relation to the CSF offer to acquire securities pursuant to the offer; or
(b) arrange financial assistance for such a person to acquire securities pursuant to the CSF offer.
Note 1: This subsection applies to financial assistance provided by the company even if that assistance does not contravene section 260A .
Note 2: Failure to comply with this subsection is an offence (see subsection 1311(1) ).
738ZE(3)
Without limiting subsection (2), the prohibition on financial assistance:
(a) applies whether the financial assistance is provided or arranged before or after the acquisition of securities pursuant to the CSF offer; and
(b) extends to the provision of financial assistance in the form of a dividend.
738ZE(4)
In this section,
financially assist
and
financial assistance
have the same meanings as they have in section
260A
.
A person must not make an offer that:
(a) is expressed to be made under this Part; and
(b) relates to a company that has not been formed or does not exist.
Note: Failure to comply with this section is an offence (see subsection 1311(1) ).
Prohibition
738ZG(1)
A person must not: (a) advertise a CSF offer or an intended CSF offer; or (b) publish a statement that:
(i) directly or indirectly refers to a CSF offer or an intended CSF offer; or
(ii) is reasonably likely to induce people to apply for securities pursuant to a CSF offer or an intended CSF offer.
Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).
738ZG(2)
None of the following constitutes advertising a CSF offer, or publishing a statement, as mentioned in subsection (1) : (a) the publication of a CSF offer or a CSF offer document (or both), or any other information relating to a CSF offer, on a platform of the responsible intermediary; (b) an advertisement or publication that does not refer to any particular CSF offer or intended CSF offer, and that does either or both of the following:
(i) identifies a person as being a CSF intermediary;
(ii) provides general material about the services provided by a CSF intermediary.
Paragraph (a) does not apply to statements made on the communication facility for a CSF offer.
Note: Subsection (8) deals with statements made on the communication facility for a CSF offer. For the meaning of communication facility , see subsection 738ZA(5) .
738ZG(3)
In deciding for the purposes of subsection (1) whether a statement: (a) indirectly refers to a CSF offer, or intended CSF offer, of securities; or (b) is reasonably likely to induce people to apply for securities pursuant to a CSF offer or an intended CSF offer;
have regard to whether the statement:
(c) forms part of the normal advertising of a body ' s products or services and is genuinely directed at maintaining its existing customers, or attracting new customers, for those products or services; and (d) communicates information that materially deals with the affairs of the body; and (e) is likely to encourage investment decisions being made on the basis of the statement rather than on the basis of information contained in a CSF offer document.738ZG(4)
Subsection (1) does not apply if any of subsections (6) to (9) provide that the advertisement or publication does not contravene subsection (1) .
Note: A defendant bears an evidential burden in relation to the matter in this subsection (see subsection 13.3(3) of the Criminal Code ).
738ZG(5)
An offence based on subsection (1) is an offence of strict liability.
Exception for publicising CSF offer or intended CSF offer
738ZG(6)
An advertisement or publication that refers to a CSF offer or an intended CSF offer does not contravene subsection (1) if the advertisement or publication states that a person should, in deciding whether to make an application pursuant to the offer, consider the CSF offer document for the offer and the general CSF risk warning (whether or not the advertisement or publication also contains other material).
Note: If an advertisement or publication of a kind referred to in this subsection is defective (as defined in subsection 739(6) ), ASIC may make a stop order under section 739 .
Exception for publishers
738ZG(7)
A person does not contravene subsection (1) by publishing an advertisement or statement if the person: (a) publishes it in the ordinary course of a media business; and (b) did not know, and had no reason to suspect, that its publication would amount to a contravention of subsection (1) .
Exception for statements made on communication facility for CSF offer
738ZG(8)
A statement made in good faith on the communication facility for a CSF offer does not contravene subsection (1) .
Other general exceptions
738ZG(9)
An advertisement or publication does not contravene subsection (1) in relation to a CSF offer, or an intended CSF offer, if it: (a) consists solely of a notice or report of a general meeting of the company making, or intending to make, the offer; or (b) consists solely of a report about the company making, or intending to make, the CSF offer that is published by the company and:
(i) does not contain information that materially affects affairs of the company, other than information previously made available in a CSF offer document that has been published on a platform of a CSF intermediary, a disclosure document that has been lodged, an annual report or a report referred to in paragraph (a); and
(c) is a news report or is genuine comment, in the media, relating to:
(ii) does not refer (whether directly or indirectly) to the CSF offer or intended CSF offer; or
(i) a CSF offer document for the CSF offer that has been published on a platform of a CSF intermediary, or information contained in such a document; or
(d) is a report about securities of the company (or proposed company) making, or intending to make, the CSF offer that is published by someone who is not:
(ii) a notice or report covered by paragraph (a) or (b); or
(i) the company; or
(ii) acting at the instigation of, or by arrangement with, the company; or
(iii) a director of the company; or
(iv) a CSF intermediary that is or will be the responsible intermediary for the offer; or
(v) any other person who has an interest in the success of the issue of the securities.
Paragraphs (c) and (d) do not apply if anyone gives consideration or another benefit for publishing the report.
[ CCH Note: S 738ZG(9) will be amended by No 69 of 2020, s 3, Sch 1[1125], by inserting " with the Registrar " after " lodged " in para (b)(i) (effective 1 July 2026 or a day or days to be fixed by Proclamation).]
Meaning of media
738ZG(10)
For the purposes of this section, the media consists of: (a) newspapers and magazines; and (b) radio and television broadcasting services; and (c) electronic services (including services provided through the internet) that:
(i) are operated on a commercial basis; and
(ii) are similar to newspapers, magazines or radio or television broadcasts.
This Part does not affect any liability that a person has under any other law.
A company is covered under this section at a particular time if:
(a) the company:
(i) was registered as a public company limited by shares under Part 2A.2 in response to an application lodged under section 117 before the eligibility end day; or
(ii) was converted from a proprietary company to a public company limited by shares under Part 2B.7 in response to an application lodged under section 163 before the eligibility end day; and
(b) the application made in relation to the company ' s registration or conversion stated that:
(i) the company will be covered under this section on registration or when the company ' s registration is altered to reflect its conversion; and
(ii) the company intends to make a CSF offer after its registration or conversion; and
(c) the company is an eligible CSF company at that time; and
(d) the time is within 5 years after the company ' s registration as, or conversion to, a public company limited by shares; and
(e) if the time is at or after the end of a financial year that ends later than 12 months after the company ' s registration as, or conversion to, a public company limited by shares - the company has completed a CSF offer at that time; and
(f) the company has been covered under this section at all times since its registration as, or conversion to, a public company limited by shares; and
(g) as at that time, the company has not made any offers of securities for issue or sale that need disclosure to investors under Part 6D.2 .
738ZI(2)
In this section:
eligibility end day
means the day Part 1 of Schedule 1 to the
Corporations Amendment (Crowd-sourced Funding for Proprietary Companies) Act 2018
commences.
The regulations may make provision relating to how CSF intermediaries are to deal with applications made pursuant to CSF offers, including (but not limited to) the following:
(a) the order in which applications are to be dealt with;
(b) circumstances in which applications must or may be rejected;
(c) when applications are to be counted towards the maximum subscription amount, or the minimum subscription amount, in relation to a CSF offer.
Chapter 2E applies to a proprietary company that has one or more CSF shareholders as if references to a public company were instead references to such a proprietary company.