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ASSOB Rules of Admission
The Australian Small Scale Offerings Board has taken the initiative with regard to self-regulating its own Platform in an effort to provide clear guidelines for all participants.
Below is an abbreviated version of some of the ASSOB rules that all companies using the platform are expected to comply with, as well as a brief description of some other measures that have been put in place for Issuer's to demonstrate good governance and investor protection.
Australian domiciled companies only
ASSOB does not allow foreign companies that are not subject to the Australian Corporations Act 2001 (Cth) and other laws to participate on its capital raising platform. Overseas entrepreneurs wishing to raise equity funding in Australia are encouraged to source Australian-based executives to their board through Executive Equity.
Public companies preferred
ASSOB prefers public companies to undertake capital raising campaigns through its platform (the ASSOB OfferBoard). This is for three (3) reasons:
- Public companies require a minimum of three (3) directors, whereas private companies require only one (1). Having three (3) directors with varied expertise and experience reduces the chance of a company's direction falling to one individual without consideration of other's views.
- Public companies must be independently audited and hold an Annual General Meeting, providing another level of transparency for investors and an avenue for acquiring an understanding of the operations of the company significantly increasing investor confidence.
- Public companies are able to raise large amounts of capital through ASIC registered disclosure documents and eventually, as part of a planned exit strategy, list on a suitable stock exchange to have shareholders publicly trade their holdings on a secondary market.
The ASSOB Rules of Admission for Limited Companies can be downloaded here.
Private companies recognised
ASSOB understands that not every company is suitable as a public company and for various operational, financial and regulatory reasons a company is sometimes better off remaining as a private entity.
However, as private means 'private', it must be noted that proprietary limited (pty ltd) entities are not often ideal vehicles to secure investment, simply because a privately held company has no requirement to publicly disclose much information about itself.
To assist private companies seeking to raise less than $500,000 in start-up or seed capital and to provide investors some comfort that private companies can be as upfront about their business as their public company counterparts, in recognising that private companies have a major importance in the world's economy and, are in fact, the bedrock upon which public companies originate, ASSOB has tailored its services to include private companies.
The ASSOB Rules of Admission for Proprietary Limited Companies can be downloaded here.
Quarterly activity statement must be published on Profile Page
All companies profiled through the ASSOB Platform must lodge a detailed report that includes:
- A statement confirming solvency.
- A summary of how investor funds have been spent and if different to the 'Use of Funds' schedule (outlined in the offer document) an explanation of why those spending changes were made.
- A general summary of the company's progress toward the milestones that were stated in the capital raising offer document.
- Any changes, news or events (good or bad) that affect the company.
This statement must be signed by all directors and be delivered to ASSOB by the 21st day of the new quarter (i.e. 21 April, 21 July, 21 October and 21 January). Once received by ASSOB and reviewed, the statement is then published on the company's Profile Page by way of a company announcement.
Each company must maintain its ASSOB Profile Page
Each company must keep the following details up-to-date at all times on its Profile Page by informing ASSOB when changes are made with ASIC or at a Board level:
- Company address
- Company phone number
- Company website
- Current Officeholder details
Any changes to these items must be updated within 48 hours of the change and in some circumstances, a written statement must be forwarded to ASSOB for inclusion as an announcement on the platform.
Companies must retain a professional share registrar
Companies are required to engage the services of a professional share registrar to ensure that its Register of Members is up-to-date and properly reflects shareholder details, transactions and investment received.
True and fair disclosure at all times
Companies profiled through the ASSOB Platform are expected to deal with their shareholders and potential investors with the utmost commitment to true and fair disclosure. Whether it be the investment document, investor or shareholder meetings, quarterly reporting or personal discussions with directors, it is expected that investors and shareholders are told the truth, without embellishment or omission of necessary information.
Funds are held in trust
All companies raising funds via the Platform are required to engage an external trust account operator. This measure ensures that all investor funds are held in trust until such time as certain conditions of the capital raising offer have been met. An example of such a condition would be the minimum amount to proceed clause that is contained within each capital raising investment document. Until such time that the Minimum Subscription Amount (MSA) the company needs to fulfill its objectives through the equity capital raising has been received into the trust account, no funds are to be released to the company. If the company's offer fails to reach its target MSA amount within 4 months, all investor funds will be refunded by the trust account operator without loss or fees to the investors.
If ASSOB considers that a breach of any of its 'ASSOB Rules of Admission' has occurred, then each breach will be handled accordingly.
It must be noted that ASSOB does not deal with breaches of the Corporations Act and can only apply a penalty in regard to a company's ability to access the benefits of being promoted through the ASSOB Platform. Any breaches of the Corporations Act are a matter for the Australian Securities & Investment Commission (www.asic.gov.au).