Commercial Law


The new Financial Markets Conduct Act (“Act”) has changed the way in which disclosure in the financial markets sector is made, and to whom. Disclosure requirements were previously scattered throughout legislation and case law and it was often difficult to work out which investors required disclosure. This article provides a brief overview of the changes around disclosure. These should make it easier to determine when disclosure is required and may be particularly helpful for small businesses seeking to raise capital, but minimise compliance costs.

Key Changes

Disclosure is required if an offer is a “regulated offer”. An offer is a regulated offer if one person to whom the offer is made requires disclosure. If everyone to whom an offer is made does not require disclosure, an offer is not a regulated offer. This means that for the same offer, disclosure may be required to some investors, but not others. If an offer is regulated, disclosure is made through a product disclosure statement (“PDS”) and an online registry. The form and content of the PDS is heavily prescribed by regulations but generally the PDS will contain a key summary, with further content sitting behind it. Continuous disclosure is required through an online registry. This should help keep compliance costs down. Previously, if disclosure was not made to an individual to whom disclosure should have been made, the offer was void. Now failure to make disclosure to one party does not void all of the offers made, just that individual one.


If you are a small business looking to raise capital you may not need to go to lengths of disclosure. There are a number of investors who are excluded from disclosure requirements. Generally, disclosure is not required where investors are:

  • sophisticated enough to access relevant information; or
  • have a sufficiently close relationship to the issuer to enable them to access the information.

The broad exclusions are:

  • Wholesale investors.
  • Close business associates.
  • Relatives.
  • Small offers.

Some of these exclusions are carried through from the existing legislation and are now defined more clearly. Some exclusions are new, designed to create more flexibility. The “wholesale investor” covers most of those people who were considered “habitual investors” with some additions. Wholesale investors now includes “eligible investors” which allows an investor to “self-certify” that they are exempt from requiring disclosure. The certification requirements differ slightly depending on the type of financial product, but generally a person needs to certify that they have sufficient experience to assess the merits of the offer, and that they understand the consequences. A lawyer, accountant or financial advisor needs to confirm the certification. Another new exclusion is “small offers” for equity or debt securities. Disclosure is not required where the following circumstances apply:

  • The number of persons does not exceed 20 in any 12 month period;
  • The amount raised does not exceed $2 million in any 12 month period; and
  • The offer may only be accepted by a person who is “likely to be interested” in the offer OR who has an annual gross income of over $200,000 in the last two income years OR who are controlled by that person.


You should always obtain advice as to whether or not disclosure is required before making an offer. Please get in touch with us if you have any questions about disclosure and your obligations. We would be happy to provide assistance.