Subject Corporate law

Sharkfest Ltd buys the intellectual property for new products and services, and then commercialises this IP. Once a new line of business is fully established, it is sold off at a profit. The company fails to make a profit on approximately 40% of the IP it buys as the ideas cannot be commercialised profitably, either due to high development, production or distribution costs or an idea fails to attract a market. Nevertheless, over the past ten years, Sharkfest has increased its profits each year. Sharkfest now would like to expand its operations to take advantage of an expected boon in post-pandemic products and services related to working from home. The company is looking to raise $50m through a share issue. One option is to offer shares in Sharkfest to institutional investors. An alternative would be to float the business, that is, offer the shares to the public and apply for listing on the Australian Securities Exchange (ASX).

Required:

(a) What are the implications under Ch 6D of the Corporations Act 2001 (Cth) of the two fundraising options being considered?

(b) If a decision is made to float the company and seek its listing on the ASX, what type of disclosure document will be required and what information must it contain?

and (c) If forecasts about the prospects of the company are included in the offer document, what are the potential consequences should the forecasts not be met? Are there any precautions in relation to disclosure that Sharkfests board of directors, and their advisers should take?