Submitted by: Submitted by jinzirui
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Pages: 10
Category: Other Topics
Date Submitted: 10/16/2010 02:39 AM
Introduction
Aurora need at least 15M to conduct its business, and the board of the Aurora decide to acquire this amount of fund by two ways: Issue 5 million shares in exchange for 5 million dollars investment from Southpact Limited and raise 9 million dollars by a public float.
Both of these ways falls under the definition of offering securities, thus both of them need to follow the procedure required in Corporate Act briefly described here: 1. prepare the proper disclosure document considering the circumstances so all the required information would be provided and there wouldn’t be any misleading or deception. 2. Lodge the required disclosure document with ASIC. 3. Offer the securities. 4. What need to be done if there are deficient lodge or new matter arises.(to avoid criminal and civil liabilities) 5. Hold the money until securities are issued or transferred. 6. Issue or transfer the securities.[1] Also there are liabilities in both ways. And to Aurora there are three major issue to discuss during this procedure: What kind of disclosure document should they prepare? What’s the necessary content of the disclosure document? What’s the possible liabilities for misstatement.
What kind of disclosure document should they prepare?
For the 5 million dollars investment for Southpact Limited: disclosure document does not required in all circumstances, there are a number of specific exemptions from the requirement to use a disclosure document when issuing securities provided in Corporations Act. One is that if offer is made to “sophisticated investors”, then disclosure document is not required. So we need to find out if Southpact Limited qualify as “sophisticated investor”. There are three circumstances, fits any one of them means Southpact Limited is a “sophisticated investor.” One of the three circumstances is “the minimum amount payable for the securities on acceptance of an offer by the person to whom the offer is made is at least $500,000.”[2] Southpact Limited...