Part 4 – Offering Securities

Part 4 provides an overview of the regulatory compliance regime for offering securities by a co-operative. In particular it describes the preconditions, processes and the disclosure requirements for offers of co-operative securities, being membership shares, additional shares, debentures and CCUs. Most disclosure obligations will require the co-operative to provide information about its business plan to explain the nature of the co-operative’s activities and how it will use any capital raised through an offer. The basic inclusions for a business plan will also be covered in this Part.

The Australian legal system is federal and there is almost always an interaction between state and federal laws.

An offer document is any form of promotional literature that encourages persons to invest in a co-operative.

The first step in planning an offer of securities is to identify which of the three types of offer is most appropriate for the co-operative at that time. This will change as the co-operative develops, and it is helpful to prepare a longer-term strategy for how the co-operative will plan its future capital needs so that its rules are broad enough to encompass those future needs.

The following information should be provided in all disclosure statements, unless the information is not relevant to the offer.

Membership share offers, specific disclosure for a membership offer, what should be in a business plan.

A co-operative may need additional share capital from its members. There are a number of ways to achieve this.

As for share capital, investor motivation in debt securities will be biased in favour of a project that is seen as having value to the community. As in any crowdfunding campaign, the interest of the community must be piqued. The attractiveness of any offer of debentures or CCUs will be measured against the thoroughness and clarity of any disclosure and the robustness or veracity of any financial projections.

The process and disclosure requirements for the offer of debentures or CCUs to non-members, referred to as ‘public offers’, are governed by s337 of the CNL.

There is a regulatory restriction on the issue of securities by a co-operative outside its ‘home’ jurisdiction. The reasons for this are bound up in the complexity of a federal regulatory system.

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