THE CORPORATIONS LAW

CHAPTER 6D - FUNDRAISING

PART 6D.2 - DISCLOSURE TO INVESTORS ABOUT SECURITIES

Division 5 - Procedure for offering securities

SECTION 724   CHOICES OPEN TO PERSON MAKING THE OFFER IF DISCLOSURE DOCUMENT CONDITION NOT MET OR DISCLOSURE DOCUMENT DEFECTIVE  

724(1)  [Dealing with applications pursuant to non-compliance]  

If a person offers securities under a disclosure document and:

(a)  the disclosure document states that the securities will not be issued or transferred unless:

(i) applications for a minimum number of the securities are received; or

(ii) a minimum amount raised;

and that condition is not satisfied within 4 months after the date of the disclosure document; or

(b)  the disclosure document states or implies that the securities are to be quoted on a stock market of a securities exchange (whether in Australia or elsewhere) and:

(i) an application for the admission to quotation is not made within 7 days after the date of the disclosure document; or

(ii) the securities are not admitted to quotation within 3 months after the date of the disclosure document; or

(c)  the person becomes aware that:

(i) the disclosure document contains a misleading or deceptive statement; or

(ii) there is an omission from the disclosure document of information required by section 710, 711, 712, 713, 714 or 715;

that is materially adverse from the point of view of an investor; or

(d)  the person becomes aware of a new circumstance that:

(i) has arisen since the disclosure document was lodged; and

(ii) would have been required by section 710, 711, 712, 713, 714 or 715 to be included in the disclosure document if it had arisen before the disclosure document was lodged; and

(iii) is materially adverse from the point of view of an investor;

the person must deal under subsection (2) with any applications for the securities made under the disclosure document that have not resulted in an issue or transfer of the securities. For the purpose of working out whether a condition referred to in paragraph (a) has been satisfied, a person who has agreed to take securities as underwriter is taken to have applied for those securities.

724(2)  [Consequences of non-compliance]  

The person must either:

(a)  repay the money received by the person from the applicants; or

(b)  give the applicants:

(i) the documents required by subsection (3); and

(ii) 1 month to withdraw their application and be repaid; or

(c)  issue or transfer the securities to the applicants and give them:

(i) the documents required by subsection (3); and

(ii) 1 month to withdraw their application and be repaid.

Note:

Section 719 deals with lodging supplementary and replacement documents. Section 728 makes it an offence for a person to offer securities if the disclosure document is deficient in a way that is material from the point of view of an investor.

724(3)  [Documents to be given]  

The documents to be given are set out in the following table:

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Documents to be given                        [operative]
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   Circumstances              Documents
--------------------------------------------------------
 1 the sole disclosure        a supplementary or
   document is a              replacement prospectus
   prospectus                 that corrects the
                              deficiency or changes the
                              terms of the offer
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 2 the disclosure             a statement that sets out
   documents are a            the changes needed to the
   prospectus and a           prospectus to correct the
   profile statement and      deficiency or change the
   subsection (1) applies     terms of the offer; and
   to the prospectus
                              a statement that the 
                              person is entitled to a 
                              copy of the prospectus 
                              free of charge
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 3 the disclosure             a supplementary or
   documents are a            replacement profile
   prospectus and a           statement that corrects
   profile statement and      the deficiency or changes
   subsection (1) applies     the terms of the offer
   to the profile statement

   Note that item 2 and
   this item may both
   apply to the offer.
--------------------------------------------------------
 4 the disclosure             a supplementary or
   document is an offer       replacement offer
   information statement      information statement that
                              corrects the deficiency or
                              changes the terms of the
                              offer
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