Chapter 6D Corps Act

Chapter 6D of the Act (ss 700-742) contains a highly prescriptive scheme in respect of the disclosures that are, and are not, to be made in respect of the corporate fundraising governed by the chapter.

Section 703 ensures that there can be no contracting out of the requirements of the chapter.

Sections 704 to 725 provide for the circumstances in which the disclosures required by Ch 6D are to be made and also set out the requirements that are to be met in respect of those disclosures.

Part 6D.3 sets out the prohibitions, liabilities and remedies in respect of corporate fundraising governed by Ch 6D.

The provisions that create the statutory right to compensation that are relevant for present purposes are ss 728(1) and 729.

When ss 728 and 729 were recast into their present form by the Corporate Law Economic Reform Program Act 1999 (Cth), par 8.1 of the Explanatory Memorandum accompanying the bill stated that a purpose of the sections was as follows:

‘to ensure that issuers continue to provide full disclosure in the associated prospectus, issuers will be liable to investors in relation to the prospectus.’

Securities are broadly defined in s 92 of the Act.

A ‘disclosure document’ for an offer of securities is defined in s 9 as including, inter alia, a ‘prospectus for the offer’.

Sections 731, 732 and 733 set out a number of the defences, such as due diligence, lack of knowledge and reasonable reliance, that are available in respect of contraventions of s 728 and claims under s 729.

Sections 737 and 738 establish a limited right to return securities and to recover the money paid.

Sections 741 and 742 provide for exemptions from, and modifications to, Ch 6D by the Australian Securities and Investments Commission or by regulations.

Several features of the statutory scheme in respect of disclosure documents, which include prospectuses, should be noted.