The Australian Securities and Investments Commission (ASIC) has issued an interim order stopping Hirehood Pty Ltd from offering securities under its crowdfunding offer document (CSF) published on brokerage platform VentureCrowd Pty Ltd.
ASIC has made this interim order in the public interest to protect retail investors who wish to invest in this offering.
This is the first use by ASIC of its stop order powers in relation to a CSF offer under the Companies Act 2001.
The regulator took action in relation to Hirehood’s use of a candidate agreement. This agreement did not allow investors to directly acquire Hirehood common stock. Instead, the shares issued by Hirehood were intended to be held by a related party of the intermediary, as a nominee in full trust for the shareholders.
For an offer to be valid under the applicable CSI regime, only fully paid common shares may be offered. Hirehood’s nominee agreement resulted in the investors owning only an equitable interest in the fully paid common shares, rather than full legal and equitable ownership rights normally associated with ownership of common shares.
ASIC also took action as the offer document did not comply with the minimum content requirements set out in the Partnerships Act and Companies Regulations 2001, which include providing sufficient details about the issuer’s business model.
While ASIC recognizes that the CSF regime is designed to facilitate flexible and low-cost access to capital, ASIC reminds issuers and intermediaries that we will act where CSF offers are not lawfully made.
ASIC conducts targeted inspections to ensure that issuers and intermediaries comply with the statutory requirements of the CSP regime. ASIC will actively enforce compliance with the CSF framework and will exercise its powers to stop or take enforcement action if necessary to address any breaches.
The temporary order is valid for 21 days, unless revoked earlier. Hirehood will have an opportunity to make submissions before any final stop order is made by ASIC.