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Securities and capital raising in Australia

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9 Aug 2018

Harsher penalties proposed for breaches of the fundraising rules

All issues of securities (and some transfers) in Australia require a disclosure document, such as a prospectus, unless an exception applies.Following from the banking Royal Commission, the Federal Government has recently announced significantly higher penalties for non-compliance with these disclosure rules. It is therefore vital for companies, their officers and advisers to understand and comply with these rules. 

Amongst other changes, the government intends to provide for a maximum possible sentence of up to ten (10) years’ imprisonment for criminal breaches of the law.  It also proposes large civil fines, ranging from a maximum of $1.05M for individuals through to a maximum $10.5M for corporations.  Alternatively, civil penalties can be imposed of three times the benefit gained or the loss avoided. 

The changes come at a time when inbound M&A deals as at May 2018 were at the highest level since the GFC. ECM activity was also up on the same time last year and the market is expecting a strong rebound from a quiet 2017, fuelled by a $9.5b IPO pipeline. With this anticipated spike in activity, it is more important than ever to understand and comply with the disclosure law in Australia.