We are an Australian Financial Services Licensee with authorisations that allow us to operate a registered crowd sourced funding platform and to offer Initial Public Offering (IPOs) to the public. It’s important that you understand who is responsible for the information provided in an Equity Crowdfunding (ECF) offer document; what OnMarket's responsibilities are, and where you are relying on information provided by the directors of the company.
Our crowd sourced funding gatekeeping responsibilities include undertaking good fame and character checks on directors, checking the company is eligible to undertake equity crowdfunding, and that the offer document contains the minimum information required, removing non-compliant offers, keeping investors’ money in a trust bank account, enabling investors to exercise their cooling off rights, and ensuring all investors are made aware of the risky nature of Equity Crowdfunding investments.
We do not undertake commercial, legal, operational due diligence on ECF offer documents in the systemic manner that has become market practice for prospectuses. The reason for this is that conducting due diligence to that extent is a lengthy exercise and would defeat the purpose of having a lower cost method for early stage companies to raise capital. Consequently, it is important to note that you are relying on the directors of the company raising the capital, and not OnMarket, to ensure the offer document is accurate and not misleading.
We have a huge number of companies approach us to raise capital. We do 2 things when we select CSF companies to make offers on our platform:
As part of our approval process, we typically focus our analysis on 5 pillars, namely Business, People, Financials, Legal and Risks. When reviewing each and every offer to determine its suitability for the OnMarket Crowd, our goal is to ensure that the campaign documents contain material information on these 5 pillars so that members can make an educated investment decision.
OnMarket does not set the price at which shares are offered, though we might give guidance to the company. Ultimately, we believe individual investors will make their own assessment as to whether an investment is a good one. Collectively, each of these individual decisions reflects the view of the crowd.
It is important to note that OnMarket does not endorse any of the companies raising funds via our platform, nor do we provide investment advice. As such, before making any investment decision we recommend that investors undertake their own research. This should include reading the offer document carefully, and may also involve reviewing all of the available information provided in the campaign, asking questions directly of the company management via the OnMarket communication facility and understanding the risks associated with investing in early stage businesses.
Although every business is different, detailed below is a summary of the analysis that we undertake when we decide whether to host a particular offer. However, it is important to note that we do not conduct a process of verification of statements made by directors, though we may ask to review source documents.
Each company will be required to include a business plan as part of their campaign that will, at a minimum, provide the following information:
OnMarket’s process will focus on assessing the quality and consistency of the information provided in the campaign documents. However, we do not endorse the business plan. This is for you to assess when you decide whether to invest or not.
People are the most important aspect of any business, and the OnMarket team will undertake a number of checks and balances on all relevant individuals, including:
OnMarket will, where possible, use independent sources to verify information, and may utilise third party service providers to carry out these checks. We make our own assessment of management capabilities when we decide which offers are approved to use the OnMarket platform. However, we do not endorse director’s or management’s ability. This is for you to assess when you decide whether to invest or not.
The assessment of the financial position and prospects undertaken by OnMarket will be dependent on the stage the company. Broadly, this might involve:
It is important to note that OnMarket will not undertake an audit of the company, nor does it set the valuation. This is for you to assess when you decide whether to invest or not.
When considering the legal and capital structure of companies raising finance on our platform, we generally:
In addition, investors should ensure they are comfortable with:
We may, if we consider necessary, recommend amendments to the documents or make appropriate disclosures or exception reports to investors to outline investor rights or risks.
Under OnMarket’s Terms and Conditions, every company, acting on behalf of its directors, must agree that all information which is provided to OnMarket is true and accurate.
All companies raising crowdfunding are required to disclose in the offer document risks that may specifically impact the business. These risks may include, but are not limited to:
OnMarket will work with the company to endeavour to make their risk disclosure clear and concise in the campaign documents.
Under the legislative regime for crowd sourced funding, we have specific obligations that apply in recognition of our important role as a ‘gatekeeper’.
It is the responsibility of the company, and its directors to take steps to satisfy themselves that all information contained in the offer document is accurate, that all of the required information has been included and that there is nothing misleading in the offer document. Where a statement in the offer document relates to a future matter, the person making the statement must have reasonable grounds for making the statement.
It is our responsibility as a crowd sourced funding intermediary to check that the offer document includes all of the required information, but we rely on the company to ensure the information is accurate.
There are a number of defences available to the ECF company and directors for an offer of shares under a defective offer document. These include: