THE CORPORATIONS LAW

CHAPTER 6D - FUNDRAISING

PART 6D.2 - DISCLOSURE TO INVESTORS ABOUT SECURITIES

Division 4 - Disclosure requirements

SECTION 710   PROSPECTUS CONTENT - GENERAL DISCLOSURE TEST  

710(1)  (Disclosure test)  

A prospectus for a body's securities must contain all the information that investors and their professional advisers would reasonably require to make an informed assessment of the matters set out in the table below. The prospectus must contain this information:

(a)  only to the extent to which it is reasonable for investors and their professional advisers to expect to find the information in the prospectus; and

(b)  only if a person whose knowledge is relevant (see subsection (3)):

(i) actually knows the information; or

(ii) in the circumstances ought reasonably to have obtained the information by making enquiries.

--------------------------------------------------------
 Disclosure                                  [operative]
--------------------------------------------------------
   Offer                              Matters           
--------------------------------------------------------
 1 offer to issue (or       * the rights and liabilities
   transfer) shares,          attaching to the 
   debentures or interests    securities offered 
   in a managed investment 
   scheme                   * the assets and liabilities,
                              financial position and 
                              performance, profits and 
                              losses and prospects of 
                              the body that is to issue 
                              (or issued) the shares, 
                              debentures or interests 
--------------------------------------------------------
 2 offer to grant (or       * the rights and liabilities
   transfer) a legal or       attaching to: 
   equitable interest in
   securities or grant        - the interest or option
   (or transfer) an           - the underlying securities
   option over securities  
                            * for an option - the 
                              capacity of the person 
                              making the offer to issue 
                              or deliver the underlying 
                              securities 

                            * if the person making the 
                              offer is: 

                              - the body that issued or 
                                is to issue the 
                                underlying securities; or
                              - a person who controls 
                                that body;

                              the assets and liabilities, 
                              financial position and 
                              performance, profits and 
                              losses and prospects of 
                              that body

                            * if subsection 707(3) or (5) 
                              applies to the offer - the 
                              assets and liabilities, 
                              financial position and 
                              performance, profits and 
                              losses and prospects of the 
                              body whose securities are 
                              offered
--------------------------------------------------------
        

Note:

Section 713 makes special provision for prospectuses for continuously quoted securities.

710(2)  [Relevant circumstances]  

In deciding what information should be included under subsection (1), have regard to:

(a)  the nature of the securities and of the body; and

(b)  if the securities are investments in a managed investment scheme - the nature of the scheme; and

(c)  the matters that likely investors may reasonably be expected to know; and

(d)  the fact that certain matters may reasonably be expected to be known to their professional advisers.

710(3)  [Relevance of knowledge]  

For the purposes of this section, a person's knowledge is relevant only if they are one of the following:

(a)  the person offering the securities

(b)  if the person offering the securities is a body - a director of the body

(c)  a proposed director of the body whose securities will be issued under the offer

(d)  a person named in the prospectus as an underwriter of the issue or sale

(e)  a person named in the prospectus as a stockbroker to the issue or sale if they participate in any way in the preparation of the prospectus

(f)  a person named in the prospectus with their consent as having made a statement:

(i) that is included in the prospectus; or

(ii) on which a statement made in the prospectus is based

(g)  a person named in the prospectus with their consent as having performed a particular professional or advisory function.

Note:

Section 729 says who is liable for misstatements in, and omissions from, a disclosure document.