January 5, 2020

When a CSF offer is made, opened, closed, suspended and complete

Melissa Walker Horn @sugercoatit

When a CSF offer is made, opened, closed, suspended and complete

5 January 2020

Below are the rules for the term of a crowd sourced funding (CSF) offer based on section 738N of the Corporations Act 2001 (Cth).                       

And all section references in this article are from the Corporations Act 2001 (Cth).

When a CSF offer is made

A CSF offer is made at the time when a CSF offer document for the offer is first published on a platform of the responsible intermediary.

A responsible intermediary is simply a single platform where you publish your CSF offer document.

You can only publish the offer if its content complies with CSF regulations: 738L Corporations Act 2001 (Cth). We are not going through offer content in this article.

When a CSF offer is open

A CSF offer is open during the period starting at the time when the offer is made and ending at the time when the offer is closed, but not including any part of that period while the offer is suspended (explained below).

When a CSF offer is closed

Subject to the timing and hosting rules below, the responsible intermediary for a CSF offer may close the offer at any time by giving notice on the offer platform that the offer is closed. If the intermediary does so, the offer is closed from the time when notice is so given on the offer platform.

Timing of CSF offer close

The responsible intermediary for a CSF offer must close the offer as soon as practicable after the first of the following occurs:

(a)  the period of 3 months starting from when the offer was made ends;

(b)  if the CSF offer document states a period during which the offer is to be open, or a date after which the offer is no longer to be open--that period ends or that date occurs;

(c)  the responsible intermediary considers that the offer is fully subscribed to the maximum;

(d)  the company making the offer notifies the responsible intermediary under section 738S that the company wants the offer withdrawn;

(e)  section 738Q prohibits the continued publication of the CSF offer document on the offer platform.

Any failure to comply with the rules above for an offer close is an offence (under subsection 1311(1)).

And also under subsection 738X(2), which requires the responsible intermediary to either close or suspend the CSF offer if the intermediary becomes aware that the CSF offer document is defective.

Hosting arrangement for a CSF offer

The hosting arrangement for a CSF offer may impose limits on the responsible intermediary's power to close the offer otherwise than in circumstances when the intermediary:

(a)  is required by subsection (4) to close the offer; or

(b)  is required by subsection 738X(2) to either close or suspend the offer because the CSF offer document is defective.

When a CSF offer is suspended

A CSF offer is suspended during the period of any suspension of the offer under section 738X (responsible intermediary's obligations on becoming aware that CSF offer document is defective).

When a CSF offer is complete

A CSF offer is complete if:

(a)  the offer is closed because of paragraph (4)(a), (b) or (c); and

(b)  all periods within which people could withdraw applications made pursuant to the offer have ended; and

(c)  the applications that have been received by the responsible intermediary and that have not been withdrawn or rejected represent at least the minimum subscription amount for the offer.

Section 738T outlines when applications can be withdrawn.

Do you have questions or comments about crowd sourced funding? Be sure to leave them below. 


About the author 

Vivian Michael

As founder and lawyer at Michael Law Group, CPA and owner of a business consultancy, Vivian is well-positioned to advise Australia's top entrepreneurs. Entrepreneurs benefit from Vivian's commercially focussed legal advice, business experience, and commitment to deliver the best quality business legal services to entrepreneurs.

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