Guiding principles for offer and disclosure documents

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

Offer documents under the CNL are called disclosure statements and they may or may not include terms of issue for the securities on offer. They perform a similar disclosure function as a prospectus under a company share offer.

Disclosure statements for the offer of membership shares and for the offer of debentures or CCUs to members are subject to a formal process of approval by the Registrar.

The Registrar’s approval does not add to the reliability or veracity of any of the information in the offer document, the final responsibility for accuracy and transparency lies with the co-operative and its officers. The Registrar’s role in approving offer documents is merely administrative in that the Registrar is satisfied that the document meets the disclosure requirements under the CNL and is not inconsistent with other material already in the possession of the Registrar46.

Generally, disclosure statements are regulated to ensure that they provide adequate disclosure to enable a potential member or investor to make a decision to become a member or to invest.

Not only should the disclosure be adequate, it should also be truthful and responsible. Information contained in a disclosure statement may change over time, and the obligation on a co-operative and its officers is to ensure that any changes to this information are communicated to potential investors as soon as possible. This may involve lodgement of an amended or updated disclosure statement.

The obligation to make proper and accurate disclosure applies not only to the actual disclosure statement but also to any associated materials or information that the co-operative produces to promote or advertise the securities.

Accordingly, officers of a co-operative involved in offering securities have a duty to ensure that any information in the offer document or other promotional material is accurate, not misleading and is the result of careful consideration and due diligence.

Co-operatives are subject to the same obligations as to accuracy in a disclosure statement as companies. More importantly, they are required to keep their disclosure statements current47. Requirements to maintain currency, combined with the potential for both civil action and prosecution for misdescription or misleading statements helps to keep the co-operative’s disclosure material ‘live’.