What is a Crowd-Sourced Funding Offer Document?

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Since the offer document is key requirement, and the largest body of work associated with a crowd sourced funding (CSF) raise, we thought we would take the time to provide an explanation for what the offer document is, and why it is so important.

What is an offer document?

• An offer document simply provides investors with details about your CSF offer, these include

• Information about your company.

• Information about the offer.

• Information about investor rights.

• Any investment risks

Although we did mention the offer document is a large body of work, the disclosure requirements for a CSF offer document outlined in ASIC’s RG 261 Crowd-sourced funding: Guide for Companies are much less onerous than a prospectus. This makes the offer document a key advantage for a CSF raise as your company can access public equity financing in a timely and cost-effective manner.

See below for a summary of the minimum information required by law to be included in a CSF offer document:

Section	The CSF document must include
Contents Page	A table of contents
Risk Warning	The general CSF risk warning. "Always consider the general CSF risk warning and offer document before investing."
Information about your company	Company details Business and organisational structure Main risks Capital structure Financial statements Directors and senior managers Details of any legal history for the company and its directors or senior managers
Information about your offer	Rights associated with the shares of the offer The offer period (minimum and maximum subscription amounts under the offer) How the funds will be used
Information about investor rights	The cooling off period Effects of the communication facility on the CSF intermediary’s platform Specific reporting and corporate governance obligations specific to your legal structure

Why is an offer document so important?

An offer document is imperative to your offer as it reduces information asymmetries and the likelihood of agency costs for potential investors. As a result, the offer document provides a minimum level of information that increases investor confidence in making a well-informed decision in relation to your offer.

A CSF offer document is an important legal document required by the Corporations Act and lodged with ASIC. You must have a CSF offer document every time you issue shares under the CSF regime.

An offer document is crucial to your offer as it must meet the requirements prescribed by the law, including company information being provided in the exact order provided for in the Act. It must also include details about your CSF offer and prescribed risk warnings. Your offer document must also be written in a clear, concise and effective way and must not be misleading or effective.

Furthermore, it is worth mentioning your company and its directors are responsible and liable for the information contained in the offer document. It is imperative directors of your company take steps to satisfy themselves that all information contained in the offer document is accurate. This includes that all the required information has been included and that there is nothing misleading or deceptive in the offer document.