Law of Investment Analysis Report

Running head: LAW OF INVESTMENT
Law of Investment
Name of the Student
Name of the University
Author Note

LAW OF INVESTMENT1
Issue
The issue arising from the present situation is whether there are any ways in which Ginger and
Rogers can raise money for the company amounting to 15 million dollars.
Rule
The companies operating in Australia has the entitlement to raise funds in Australia by making
issues of security or other financial products, which may include shares or debentures1.
The companies in Australia can raise money for their proposed ventures by way of fundraising. In
case of public companies, funds can be raised by issuing securities the general public. However, for the
purpose of issuing securities to the public proper disclosures are required to be made, unless an exemption
from the same exists. On the other hand, the proprietary companies are required to limit their raising of
funds to the shareholders and the employees of the company. The proprietary companies are only allowed
to raise funds from the public in case search a fundraising has been declared as exempt from disclosure
and has been effected through equity-based crowd-sourced funding2. The provisions relating to the
activity of fundraising by a company has been provided under chapter 6D as well as part 7.9 of chapter 7
of the Corporations Act 2001 (Cth)3.
A proprietary company depicts a company, which has been registered u/s 45A of the
Corporations Act 2001 (Cth)4. A proprietary company is generally limited by shares or can be e unlimited
company, which has a share capital. A proprietary company should not have more than fifty shareholders.
For the purpose of this section, the shareholders who are employee as well as connected with CSF offers
cannot be treated within the 50 shareholders.
1 Whitford, Keturah. "17 Corporations Law in Australia." (2018) Company Law in East Asia.
2 Cooter, Robert, and Thomas Ulen. Law and economics. (Addison-Wesley, 2016).
3 The Corporations Act 2001 (Cth)
4 The Corporations Act 2001 (Cth), s 45A

LAW OF INVESTMENT2
The Corporations Act 2001 (Cth) require certain disclosures to be made while fundraising from
the public. As per the general contention, a person is not allowed to offer Securities as well as distribute
application forms for the purpose of offering securities, which needs to be accompanied with proper
disclosure, until and unless the required disclosure documents has been lodged with Australian Securities
and Investment Commission with to that offer. The deviation from the same can only be accepted in case
of an offer, which is exempted from the disclosure requirements.
In case of proprietary companies, fundraising would only be available to them to the investors
within the precincts of Australia that are exempted from the requirements of disclosure.
As per the provisions contained on the section 708 of the Corporations Act 2001 (Cth)5, there are
certain office in relation to securities that are not required to be accompanied by disclosure documents.
Firstly, the small scale offers involving personal offers in relation to the securities of the body where 20
or less investors are involved for The raising of any amount below 2 million dollars by issuing securities
within a period of 12 months. Secondly, offers can also be made to the sophisticated investors who are
ready to pay an optimum amount of $500,000 on being accepted the offer or any investor who has been
certified by an accountant within a period of 6 months prior to the making of the offer having a net asset
of a minimum of $2500000 or even gross income of a minimum of $250000 for the last 2 financial years.
Thirdly, the professional investors can also the offered with the security without requirement. Fourthly,
there are certain offers that can be made by way of licences relating to financial services. Fifthly, any
offer that has been made to the people involved with the body of issuance like senior managers are
exempt from documentation requirement. Lastly offers made to the present security holders within the
body of issuance can also be offered with disclosure free securities. The proprietary companies operating
in Australia need to comply of any of these exceptions for the purpose of offering securities for raising
funds6.
5 The Corporations Act 2001 (Cth), s 708
6 Bottomley, Stephen. The constitutional corporation: Rethinking corporate governance. (Routledge, 2016).