ASIC has issued its first crowd-sourced funding regime stop order.

The Australian Securities and Investments Commission (ASIC) has issued its first ever interim stop order under the crowd-sourced funding (CSF) regime, targeting Hirehood Pty Ltd (Hirehood). 

The order prevents Hirehood from offering securities through its CSF offer document published on the VentureCrowd Pty Ltd platform. 

ASIC identified concerns with Hirehood’s use of a nominee arrangement, which did not allow investors to directly acquire ordinary shares in the company. 

Instead, shares were intended to be held by a related party of the intermediary as a nominee on a bare trust for the shareholders. 

For an offer to comply with the CSF regime, only fully paid ordinary shares can be issued. 

The nominee arrangement has led to investors holding only an equitable interest, rather than full legal and equitable ownership rights associated with ordinary shares.

ASIC also found that Hirehood’s offer document did not meet the minimum content requirements outlined in the Corporations Act and Corporations Regulations 2001. 

Specifically, the document lacked sufficient detail about the issuer’s business model.

The interim stop order against Hirehood was issued urgently to protect retail investors and is valid for 21 days unless revoked earlier. 

Hirehood has the opportunity to make submissions before any final stop order is issued by ASIC.

ASIC’s Regulatory Guide 261: Crowd-sourced funding: Guide for companies (RG 261) and Regulatory Guide 262: Crowd-sourced funding: Guide for intermediaries (RG 262) assists issuers and intermediaries to comply with the legislative requirements of the CSF regime under the Corporations Act.