The Corporate Law Economic Reform Program (CLERP) amendments saw the formation of chapter 6D ?Fundraising' in the Corporations Act 2001. In particular, Part 6D.3 of the Corporations Act 2001 introduced self-contained provisions to deal with the issue of liability for misstatements and omissions in disclosure documents. These replaced the previous sections regarding misleading and deceptive conduct, similarly, the misleading and deceptive conduct provisions in the State and Territory Fair Trading Acts no longer apply to security dealings. The aim of these amendments was to create a more efficient and improved fundraising market. The explanatory memorandum to the CLERP Bill stated reasons for amendments included the complications and costs associated with preparing prospectuses, and more importantly the uncertainty regarding the liability rules for fundraising and the consequences for misstatements and omissions in disclosure documents. Uncertainty caused by the overlapping application of the Trades Practices Act 1974 (Cth) and the Corporations Act regarding misstatements was a major issue and the CLERP amendments aimed to remove the uncertainty and create a more efficient fundraising market through improved disclosure.
The amendments attempt to simplify the issue of disclosure by introducing different types of disclosure options in order to provide the appropriate information to investors to ensure they have the information available to them to make an informed decision. Section 705 of the Corporations Act 2001 lists the disclosure documents to use if an offer of securities requires disclosures to investors. These documents are a prospectus, short form prospectus, profile statement and an offer information statement. Section 710 of the Corporations Ac ...