LAW2457: Law of Investment - Fundraising Advice for Twilight Happiness

This report analyzes the fundraising options available to Twilight Happiness Pty Ltd, a proprietary company providing residential aged care, to raise $15 million for a new facility. It examines the legal framework under the Corporations Act 2001 (Cth), focusing on the limitations and opportunities for proprietary companies in raising funds. The report discusses the restrictions on issuing securities to the public and explores potential exemptions, such as small-scale offers, offers to sophisticated or professional investors, and offers to existing security holders or employees. The analysis considers the company's structure, the directors' plans, and the required disclosure requirements. The report concludes with recommendations on the most suitable fundraising methods, considering the legal implications and the need to comply with the Corporations Act. The report also provides a bibliography with relevant legal sources.

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

1LAW OF INVESTMENT
Issue
The facts of the case presents the concerned that whether Twilight Happiness Pty Ltd can raise an
amount of $15 million for the proposed plan.
Rule
The companies registered and functional within the precincts of Australia would have the
opportunity of raising funds when the presence of Australia by the issuance of securities as well as certain
financial products. Such securities me include debentures as well as shares.
Fundraising is the way by which Australian companies can raise funds for the business activities
we have been proposed to be indulged with. Fundraising can be made by the public companies with the
issuance of securities towards the general public and raise funds from the public. The issuing of securities
towards the public requires apt disclosure requirements to be complied with. The disclosure requirement
for issuing shares can only be relaxed in case of transactions, which are exempted from disclosure
requirements1.
Proprietary companies are not authorised to raise funds by issuing securities to the public. The
proprietary companies can be allowed fundraising to the public only in case of exempted fundraising
activities where the disclosure is not required. The fundraising in case of proprietary company can be
made by way of equity-based crowd-sourced funding. The proprietary companies are in general barred
from raising money from the public by way of funds except for the exempted cases where the violation of
the disclosure requirements can be made. The fundraising activities of the proprietary companies needs to
be restricted to the existing employees as well as the shareholders belonging to the company2.
1 Levy, Ron, et al., eds. New Directions for Law in Australia: Essays in Contemporary Law Reform. (ANU Press,
2017).
2 Miglani, Seema, Kamran Ahmed, and Darren Henry. "Voluntary corporate governance structure and financial
distress: Evidence from Australia." (2015) Journal of Contemporary Accounting & Economics 11.1: 18-30.

2LAW OF INVESTMENT
The Corporations Act 2001 (Cth)3 provides for the legal principles, the compliance of which is
required for the purpose of ensuring valid fundraising effected by a company. The provisions contained in
chapter 6D and chapter 7 specifically part 7.9 of the Corporations Act 2001 (Cth)4, deals with fundraising
activities of the companies operating in Australia. As per the provisions contained in s 45A pertaining to
the Corporations Act 2001 (Cth)5, proprietary company is required to be treated as a company, which has
been registered under this section. Both companies limited by shares as well as companies, which are
unlimited having a share capital can defect of proprietary company for the purpose of this statue. The
number of shareholders within a proprietary company should not exceed the number of 50. However, this
number will not include the CSF offers and the employees of the company who have been offered with
shares.
The public companies are required by the Corporations Act 2001 (Cth) to make certain
disclosures with respect to fundraising that has been invited from the public. An appropriate disclosure
documents relating to the fundraising event is required to be launched by the company seeking to raise
funds with the Australian Securities and Investment Commission regarding the offer for securities. The
fundraising activity by the company without proper disclosure requirement from the public cannot be
treated as valid. Such a fundraising event will only be treated as valid even without the disclosure
requirements if the same has been exempted from disclosure requirements.
The proprietary companies can raise funds only from the investors who exist within the territory
of Australia and those other activities of raising funds where disclosure requirements are not required by
way of exemption. The exemption fundraising activities that are available to the companies have been
enumerated in the provisions contained within s 708 pertaining to the Corporations Act 2001 (Cth)6.
There are several offers with respect to which fundraising activities can be carried out even without the
disclosure requirements being complied with. In case of offers of small scale, which may include personal
3 The Corporations Act 2001 (Cth)
4 The Corporations Act 2001 (Cth), Ch 6D & Ch 7
5 The Corporations Act 2001 (Cth), s 45A
6 The Corporations Act 2001 (Cth), s 708

3LAW OF INVESTMENT
offers of the securities within the body involving investors in 20 or below with view of raising a capital of
$2000000 by way of securities issuance carried out within a time span of 1year. An offer can also be
made without proper disclosure documentation if the same has been made to the sophisticated investors
willing to a minimum of $500000 while accepting the offer. Sachin offer can also be made to any investor
who has been conferred with the certification of an accountant for having an asset of $250000for a period
of 6 months well as a gross income of $2500000 photo consecutive financial years preceding the present.
Securities can also be offered to the professional investors without the proper disclosure requirement
being complied with. The licence holders with respect to financial services can also be offered with the
securities without compliance with proper disclosure documentation. The securities that are offered to the
individuals associated with the body of the company that would include senior managers can also be
made without complying with the disclosure requirements. The companies may also issue securities to the
existing security holders in absence of proper disclosure documents. The public companies within
Australia can only issue securities for the purpose of fundraising in case of the exempted situations.
Application
In the present situation, Twilight Happiness Pty Ltd is a family company concerned with services
rendered towards residential aged care having the location in Mornington Peninsula. This is a proprietary
company as per the definition contained u/s 45A of the Corporations Act 2001 (Cth). Hence, as per the
provisions contained in s 45A pertaining to the Corporations Act 2001 (Cth), Twilight Happiness Pty Ltd
is required to be treated as a company, which has been registered under this section. It can be both limited
by shares as well as companies, which are unlimited having a share capital can effect of proprietary
company for the purpose of this statue. The number of shareholders within a proprietary company should
not exceed the number of 50. However, this number will not include the CSF offers and the employees of
the company who have been offered with shares.
Ginger and Rogers who was the directors of the company where holding 50% of the shareholding
each. They have been planning to make certain ambitious plans with respect to the company for attracting

4LAW OF INVESTMENT
cashed up retirees. Such a proposed activity would require a fund of 15 million dollars. This amount can
be raised by fundraising. Being a proprietary company, Twilight Happiness Pty Ltd, being a proprietary
company are not authorised to raise funds by issuing securities to the public. The proprietary companies
can be allowed fundraising to the public only in case of exempted fundraising activities where the
disclosure is not required. The fundraising in case of proprietary company can be made by way of equity-
based crowd-sourced funding. The proprietary companies are in general barred from raising money from
the public by way of funds except for the exempted cases where the violation of the disclosure
requirements can be made. The fundraising activities of the proprietary companies needs to be restricted
to the existing employees as well as the shareholders belonging to the company.
However, there are certain ways under which property company can raise funds even without
disclosure requirements. There are several offers with respect to which fundraising activities can be
carried out even without the disclosure requirements being complied with. In case of offers of small scale,
which may include personal offers of the securities within the body involving investors in 20 or below
with view of raising a capital of $2000000 by way of securities issuance carried out within a time span of
1year. An offer can also be made without proper disclosure documentation if the same has been made to
the sophisticated investors willing to a minimum of $500000 while accepting the offer. Sachin offer can
also be made to any investor who has been conferred with the certification of an accountant for having an
asset of $250000for a period of 6 months well as a gross income of $2500000 photo consecutive financial
years preceding the present. Securities can also be offered to the professional investors without the proper
disclosure requirement being complied with. The licence holders with respect to financial services can
also be offered with the securities without compliance with proper disclosure documentation. The
securities that are offered to the individuals associated with the body of the company that would include
senior managers can also be made without complying with the disclosure requirements. The companies
may also issue securities to the existing security holders in absence of proper disclosure documents. The

5LAW OF INVESTMENT
public companies within Australia can only issue securities for the purpose of fundraising in case of the
exempted situations.
Conclusion
Twilight Happiness Pty Ltd can raise the 15 million dollars by way of fundraising. The same can
be done in the above mentioned way.

6LAW OF INVESTMENT
Bibliography
Levy, Ron, et al., eds. New Directions for Law in Australia: Essays in Contemporary Law Reform. (ANU
Press, 2017).
Miglani, Seema, Kamran Ahmed, and Darren Henry. "Voluntary corporate governance structure and
financial distress: Evidence from Australia." (2015) Journal of Contemporary Accounting & Economics
11.1: 18-30.
The Corporations Act 2001 (Cth)