What Type of Investor Offer Document is Right for me?

I often receive inquiries from people looking for ‘a prospectus.’
In due course they discuss the investment need and it quickly becomes apparent that a prospectus would be a complete overkill. Quoting a prospectus price quickly aligns them to this fact as well!

Here is a quick guide to the type of investor documents

Disclosure Documents  – ie, these require lodgement with ASIC.

-Offer Information Statement (OIS) – A disclosure document suitable to raise up to AUD$10m for companies that have been registered for more than 12 months and have audited reports. Suitable for marketing to all types of investors including offers to the public.
-Prospectus – A disclosure document suitable for marketing to all types of investors. No limit to how much may be raised and no limit to the number of investors. Suitable for marketing to all types of investors including offers to the public.
-Product Disclosure Statement (PDS) – A disclosure document that includes all the terms and conditions of a financial product. Used mainly in financial services industry when financial products are offered in addition to insurance companies where insurance products are offered. Parties offering such financial products are required to have an Australian Financial Services License (AFSL). There are various classes of license which determine what type of product may be offered to various investors.

Non Disclosure Documents – ie these do not require lodgement with ASIC.

-Information Memorandum (IM) – Generally a detailed document suitable for personal offers, offers to sophisticated, professional, institutional and overseas investors. Not suitable for public offers.
-Investor Brief – A summary document suitable for personal offers, offers to sophisticated, professional, institutional and overseas investors. Not suitable for public offers.

Disclosed (lodged with ASIC) and non disclosed (not lodged with ASIC) – What’s the difference?
a) Target investors – If an offer is not lodged with ASIC, then it may not be distributed to the public or advertised to the public. Generally, it may only be offered to people known to the business or business proponents in addition to sophisticated & institutional investors.*
b) Cost – Any document being lodged with ASIC will cost considerably more mainly due to the fact that legal sign of is required. This means that all information offered in the document; words, phrases, images, etc must generally be substantiated by third party sources. A lawyer generally vets these documents and offers advise on the suitability of information contained within.*

So which investor offer document is right for me?
In helping determine which investor offer document is right for our clients, we firstly consider the nature and number of the target investors sought and the amount being raised. Where less than 20 investors are likely to fill the offer and the amount sought is less than $2m, a non disclosure document may suffice. A non disclosure document may also suffice where the matter is likely to be filled by sophisticated or institutional investors. If the investment amount sought is more than $2m and it is likely that more than 20 investors are required to fill the matter, a disclosure document is likely to be required.*

*NB Further restrictions apply – seek advise.

For assistance with investor offer documents, please contact The Financial Writing Company 1300 477 210.