Do you trust your Company Secretary?

Is your Company Secretary also a good cleaner?

Cleansing refers to the process required to ensure that securities, such as options, can be issued and on sold without a prospectus under certain conditions as per the Corporations Act 2001.

Chapter 6D, which deals with fundraising provisions, plays such an important role within the framework of corporate regulation in Australia.

Such a statement underlines the reverence and attention that Company Secretaries must pay to this specific chapter, especially in contexts involving the issuance of securities, disclosure documents, and most importantly, investor protections.

Do you trust your Company Secretary to be thoroughly knowledgeable about all the intricate rules and regulations detailed in Chapter 6D of the Corporations Act 2001?

Given the complexity and the crucial nature of the guidelines that govern fundraising and securities issuance, it's vital to ensure that the person in this role not only understands but also meticulously applies these regulations.

Their ability to manage these details can significantly impact the compliance and financial security of your organisation.

Hence, assessing their expertise and diligence in this area is essential for maintaining the integrity and legal standing of your business operations.

Have you ever considered the possibility that your company might have issued securities without proper disclosure?

While it might seem unlikely, it happens.

A notable example is Golden Gate Petroleum, which managed to do exactly that.

Golden Gate Petroleum itself did not engage in any dishonest practices.

However, there was an oversight related to the failure to "cleanse" options by both the company secretary and the company secretary’s consultant.

This scenario raises a pertinent question about your own practices.

Are you absolutely certain that all your securities issuances have adhered strictly to the disclosure requirements as outlined in Chapter 6D of the Corporations Act 2001?

It's crucial for you to review your procedures and ensure that your practices are not only compliant but also transparent, to maintain your reputation and avoid potential legal repercussions.

It is essential for company secretaries to be thoroughly knowledgeable about both the disclosure requirements and the cleansing regimes outlined in the Corporations Act 2001.

The Company Secretary's ability to adeptly manage these aspects is important in keeping their companies compliant and out of legal and regulatory damage.

• Michael Austin is the Company Secretary at Bio101. Bio101 is a financial services firm providing outsourced CFO, company secretarial and strategic financial advisory services specialising in the healthcare sector.