ASIC to shine light on prospectuses

THE steady number of prospectuses receiving stop orders from the Australian Securities and Investment Commission has prompted the regulator into a focused education campaign.

ASIC WA regional commissioner and national adviser Michael Gething said his office was offering information statements and using past examples of stop orders to educate people on ways to avoid being issued with an order.

“We don’t see many [prospectuses] where we feel we are being deliberately mushroomed,” Mr Gething said.

“We see that many are trying to do the right thing and have got 90 per cent of it right but are still getting one or two things wrong.”

The WA office is one of the busiest in Australia. About one in three prospect-uses, or OISs, and a corresponding percentage of stop orders are issued through the WA office.

Since July 1 2002, ASIC has issued 51 interim stop orders, and eight final stop orders.

As part of the education campaign, ASIC regularly issues media releases advising which fundraising documents have orders placed on them and the reasons why those stop orders have been issued.

ASIC says two sticking points continue to cause problems to companies that are fund raising. 

The first relates to failure to disclose the financial position and prospects of the company in the event that the offer is not fully subscribed. ASIC expects all fundraising documents to address how the company will use the funds raised.

Another concern relates to the disclosure of prospective financial information and the provision of clear assumptions on which the information is based.

Listed Western Australian mining company Conquest Mining was issued with an interim stop order earlier this year after it sought to raise $1.3 million. WA olive grower and manager Olea Australis Limited, Rusina Mining and First Australian Resources Limited, among others in WA, have also suffered through an interim stop order.

Blakiston & Crabb Solicitors partner Marcello Cardaci said it was important to have an understanding about what ASIC was looking for to avoid the same mistakes, although there was no 100 per cent guarantee of getting it right first time.

“Even expensive, good lawyers can get it wrong,” Mr Cardaci said.

Mr Cardaci and Mr Gething will be offering advice on getting a prospectus right first time at a seminar to be held later this month.