ASIC announces new interim stop orders

Yasmine Raso

Senior Journalist, Financial Newswire

9 November 2022

The Australian Securities and Investments Commission (ASIC) has placed two interim stop orders on offers from product issuers, Neldner Road Vintners Limited and Finnia Income Ltd, for not meeting target market determination (TMD) requirements.

The new orders take the total number of interim stop orders issued in relation to non-compliance with the design and distribution obligations (DDO) to 13 and stopped both companies “from issuing interests in, giving a prospectus for or providing financial advice to retail clients under the existing TMDs”.

Neldner, an unlisted public company looking to raise $10 million through Class A shares for working capital and funds to acquire vineyards and construct a cellar door, winery and accommodation facilities, raised concerns from ASIC after it was found the distribution conditions contained in its TMD were not appropriate to ensure Class A shares would be correctly dispersed.

In addition to not locating a publicly available copy of the TMD, ASIC also said the company “intended to rely on investor self-certification that they were in the target market”, conflicting with the DDO that requires product issuers to ensure consumers are in the target market.

The stop order was revoked on 7 November after Neldner made amendments to its TMD to address ASIC’s concerns.

ASIC’s stop order on Finnia came into effect after the unlisted company had not produced a TMD for its offer to raise $20 million under a prospectus through redeemable preference shares for real estate development project lending.

After receiving Finnia’s TMD, ASIC became concerned it did not “adequately describe the objectives, financial situation and needs of consumers likely to be in the target market in an objective manner” and it did not meet requirements under the DDO because the distribution conditions were limited to investors already registered with the issuer and willing to contribute $25,000 minimum and “unlikely to result in the product being distributed to consumers in a suitable target market”.

“ASIC expects Finnia to consider the concerns raised about the TMD and take steps to ensure compliance,” the regulator said in a statement today.

“ASIC will consider making a final order if its concerns are not fully addressed in a timely manner. Finnia will have an opportunity to make submissions before a decision is made about any final stop orders.”