Last Updated on 25/09/2025 by Damin Murdock
Raising capital is a crucial step for startups and growing companies, but it comes with specific legal disclosure obligations under Australian law. The Corporations Act 2001 (Cth) (the Act) sets out the general framework for when and how companies must disclose information to prospective investors. Understanding these requirements is vital to ensure compliance, protect investors, and avoid significant penalties. Further, many of these requirements are strict liability offences, meaning if you do not comply, you may be required to refund the investors funds.
When Is a Disclosure Document Required?
Under Part 6D.2 of the Act, a company offering securities (such as shares, options, SAFE notes, convertible notes) to investors generally requires a disclosure document. A disclosure document gives rise to significant obligations and must be lodged with the Australian Securities and Investments Commission (ASIC) before the offer is made.
The disclosure document serves as the primary source of information for investors and must provide clear, truthful, and comprehensive details about the offer and the issuing company.
What Must Be Included in a Disclosure Document?
The content of the disclosure document is critical, and the requirements include but are not limited to:
- Identification of the company and the type of securities being offered.
- A description of the business operations.
- The intended use of funds raised.
- Risk factors related to the investment.
- All costs and fees payable by investors.
- A statement confirming lodgment with ASIC.
- Recent financial reports and performance indicators.
The information must be accurate, complete, and not misleading. Omitting material facts can constitute a misleading and deceptive conduct by way of omission.
Exemptions from Disclosure Obligations
However, not all capital raises require full disclosure. For example, companies do not need to issue a disclosure document when raising funds from sophisticated investors. This exemption falls within section 708 of the Act and applies where an individual invests more than $500,000, or where the individual has a certificate issued by a qualified accountant verifying the investor’s net assets exceed $2.5 million, or has an annual income exceeding $250,000.00 over two consecutive years.
Key Take Aways
If you are planning of issuing a SAFE, convertible note, or issuing shares to friends, family, professional connections or similar, make sure your investor falls within the exemptions set out in section 708 of the Act. Failing to do so may be a contravention of the Act, and entitle the investor to recover their investment amount.
If you are required to issue a disclosure document, ensure that disclosure document is verified by a lawyer and accountant, ensuring it is free from false, misleading or deceptive content that has been verified by primary sources.
If, before the investment, or after the issuance of a disclosure document and before investment, there is a change of circumstances rendering prior communications or disclosure documents false, misleading or deceptive, you have an obligation to correct that information before the investment is made, otherwise, the prior statements made, or possibly the future financial projections, will be false or misleading at the time of the investment, exposing you to litigation and a contravention of the Act, the ASIC Act or the Australian Consumer Laws.
Conclusion
Raising capital in Australia involves more than just pitching to investors, it requires careful legal compliance with disclosure obligations under the Act. Whether you are issuing shares or seeking funding through convertible notes or SAFEs, understanding when and how to issue a disclosure document is essential.
Feel free to contact Damin Murdock at Leo Lawyers via our website, on (02) 8201 0051 or at office@leolawyers.com.au. Further, if you liked this article, please subscribe to our newsletter via our Website, and subscribe to our YouTube , LinkedIn, Facebook and Instagram. If you liked this article or video, please also give us a favourable Google Review.
DISCLAIMER: This is not legal advice and is general information only. You should not rely upon the information contained in this article and if you require specific legal advice, please contact us.
Damin Murdock (J.D | LL.M | BACS - Finance) is a seasoned commercial lawyer with over 17 years of experience, recognised as a trusted legal advisor and courtroom advocate who has built a formidable reputation for delivering strategic legal solutions across corporate, commercial, construction, and technology law. He has held senior leadership positions, including director of a national Australian law firm, principal lawyer of MurdockCheng Legal Practice, and Chief Legal Officer of Lawpath, Australia's largest legal technology platform. Throughout his career, Damin has personally advised more than 2,000 startups and SMEs, earning over 300 five-star reviews from satisfied clients who value his clear communication, commercial pragmatism, and in-depth legal knowledge. As an established legal thought leader, he has hosted over 100 webinars and legal videos that have attracted tens of thousands of views, reinforcing his trusted authority in both legal and business communities."
