BA214 Corporate Accounting: Analyzing IPO Prospectus and ASIC Role

This report provides an analysis of the role of a prospectus in the context of an Initial Public Offering (IPO) in the Australian capital market, emphasizing its importance as a legal document for investors. It highlights the responsibilities of company directors and owners in ensuring compliance with corporate regulations and the potential penalties for misleading information. The report also examines the role of the Australian Securities and Investments Commission (ASIC) in enhancing investor confidence by reviewing prospectuses for regulatory compliance, clear risk disclosure, and reasonable forecasting. The Biomics Biopharma Limited prospectus is reviewed as an example, covering information such as company income generation, financial position, strengths, and offer details. Overall, the report underscores the significance of regulatory adherence and transparent disclosure in IPOs to protect investors and maintain market integrity. Desklib provides similar solved assignments for students.

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BA214 Corporate Accounting

TABLE OF CONTENTS
Part A...............................................................................................................................................3
Description about the prospectus.................................................................................................3
Part B...............................................................................................................................................4
Role of Australian securities investment commission (ASIC)....................................................4
Reference.........................................................................................................................................5

PART A
Description about the prospectus
In the capital market of Australia, IPO plays an important role. Initial public offer is the
mechanism used by the private company selling their shares to the open market for the first time.
Generally, for the growth and expansion of the private company, funds are raised by selling its
shares publically. The further prospectus is the legal document which is required to be
distributed by the company at the time of initial public offer. It should be prepared by the
company according to the rules and regulation of the relevant act (Chatalova, How& Verhoeven,
2016). The content of the prospectus defines the result of the due diligence process conducted
by the company in relation to its initial public offer. It is the responsibility of the directors,
owners and the person who involved in preparing the prospectus, that all the norms and
compliance of the corporation act has been followed at the time of preparing the prospectus. If
the prospectus is misleading, then the significant penalty will be levied on the directors, owners
and the persons who are involved in making the prospectus. The prospectus is the important part
for the investors who want to invest in an IPO issued by the company (Shette & Kuntluru, 2018).
Therefore for enhancing the usability and the creditability Australian securities and investment
commission issued various guidelines for the company for issuing the initial public offer.
In the prospectus, there should be proper, clear and effective disclosure with respect to the risk
and returns associated with the offer, so that investor can evaluate their investment decision.
Prospectus also contain the important information regarding the issuer and the offer in a balanced
manner, specific content about how company can produce income or earn the money for the
investor, state about the financial position and prediction about the company, key information
regarding the directors, key managers, interest and benefit of the person who are connected with
the issuer, and related party arrangement, effect and terms and conditions of the offer and the
role of the ASIC (Boone, Floros, & Johnson,2016).
Biomics biopharma limited for increasing the financial and public profile of the company which
enhance future growth of the company, comply with the requirement of the ASX for listing the
company, for the requirement of the fund, and provide the fund for the developing the product,

company offers initial public issue in the open market. Prospectus of the Biomics Biopharma
Limited contains the general information regarding the company name and the parent company,
the company will generate the income by the sale of RNAi-based anti-acne treatment (Sensia)
and sale of element of the RNAi based skin whitening cream, and by increased investment in
marketing and launching the product in western market, revenue will grow significantly. Further
by continuing its HBV program, with the objective of securing a partnership with the big
pharmaceutical company, the successful result will be generated for the investor. Moreover, the
operation of the company is subject to the laws and norms of the government therefore in future
the cost of compliance will increase (Supplementary Prospectus - Biomics Biopharma, 2018).
Company state about the strength such as experienced leadership in biopharmaceutical, deep
knowledge about developing and selling the dsRNA based product, a major market for the
cosmetic product in China and so on. Prospectus also contains the financial position of the
company, and the audited financial figures of the company are converted to AUD from the
currency of Renminbi. Moreover, the company in the prospectus also contains the information
regarding the offer, minimum subscription, reason for the offer and so on.
From the above evaluation, it has been seen that the company followed all the regulatory rules
for issuing the prospectus. The company defined the proper clear and effective information in the
prospectus by which investor get informed about the IPO.
PART B
Role of Australian securities investment commission (ASIC)
For enhancing the confidence of the investor, ASIC plays a very important role. Every company
has to submit the prospectus to the ASIC for the review purpose. ASIC analyses whether all the
regulatory norms of the corporation act has been followed by the company, all the key
information regarding the risk and return associated with the offer properly stated in the
prospectus, significant forecasting by the company on the basis of the reasonable ground,
wording of the prospect is clear and effective, and so on (Price, 2017). If the ASIC did not feel
satisfied with the original prospectus, then make an order for the corrective disclosure and even
if ASIC further not satisfied then make the stop order of the prospectus. Therefore, the ASIC

assist the assurance of the capital market by proactively regulating the initial public offer, so that
investor can be informed about the reliable information about the offer (Fjesme, 2016).
REFERENCE
Boone, A. L., Floros, I. V., & Johnson, S. A. (2016). Redacting proprietary information at the
initial public offering. Journal of Financial Economics, 120(1), 102-123.
Chatalova, N., How, J. C., & Verhoeven, P. (2016). Analyst coverage and IPO management
forecasts. Journal of Corporate Finance, 39, 263-277.
Fjesme, S. L. (2016). Initial public offering allocations, price support, and secondary
investors. Journal of Financial and Quantitative Analysis, 51(5), 1663-1688.
Price, J. (2017). ASIC reports on how investors decide to invest in IPOs. Equity, 31(9), 18.
Shette, R., & Kuntluru, S. (2018). Readability of Initial Public Offering Prospectus and Earnings
Performance. International Journal of Economics and Financial Issues, 8(3), 68.
Supplementary Prospectus - Biomics Biopharma (2018). Retrieved from
www.biomics.com/Downloads/Biomics_Replacement_Prospectus.pdf