Question

1. The directors of Masks R Us Pty Ltd wish to expand the business and raise funds. Advise whether the company can issue a disclosure document to the public and raise funds? If not, explain why not with reference to the Corporations Act.

Answer 1

As per Corporations Act,2001 Proprietary Limited Companies can raise funds only from existing shareholders and employees or from a subsidiary company. It can also raise funds from public if the fund raising does not require a disclosure document. Public Companies with more than 50 non-employee shareholders can raise funds from the general public by issuing disclosure document.

Hence, Masks R Us Pty Ltd., a proprietary limited company, cannot issue a disclosure document to the public to raise funds.