ASIC yesterday released Report 539: ASIC Regulation of Corporate Finance, which covers its activities in corporate finance from the period January to June 2017.
The corporate regulator reiterated its focus on monitoring the application of the sophisticated investor test, noting it has worked with the accounting bodies on the issue.
In early July, ASIC said it has found that, in recent fundraisings, some accountants have used trust or company structures that purport to allow investors who are not 'sophisticated investors' to receive offers to purchase shares without a prospectus or other disclosure document.
Under the Corporations Act, accountants are able to provide a certificate of attesting that a person is a 'sophisticated investor' and therefore does not need the protections that apply to a 'retail investor'.
“The Corporations Act entrusts accountants with an important role,” ASIC said in Report 539.
“We are continuing to monitor the use of trust structures and sophisticated investor certificates for fundraising purposes.
“We also note that accountants need to be careful not to provide financial advice to their clients about fundraisings unless licensed to do so.”
The application of the sophisticated investor test has long been a contentious issue in the industry. With fundraising activity in particular, some lawyers suspect that it's a knowledge deficit - not sinister intentions - that are warranting additional regulatory pressure. You can read more about this here.
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