Australian Securities and Investments Commission v Open4Sale Global Ltd (No 2)

This Federal Court case is about fundraising compliance under the Corporations Act. ASIC brought proceedings against Open4Sale Global Ltd and two of its directors over repeated share offers made without complying with the disclosure rules in Chapter 6D. By the first day of trial, all defendants admitted 101 contraventions of section 727(6).

The Court then had to decide what should happen next. It refused to excuse the directors from liability, imposed substantial pecuniary penalties on them, disqualified them from managing corporations for lengthy periods, and granted injunctions restraining future non-compliant fundraising conduct. The company itself was not ordered to pay a pecuniary penalty.

Open4Sale Global Ltd was an unlisted public company. ASIC alleged that between 13 March 2019 and 26 July 2023 there were 101 offers of shares in the company that did not comply with the disclosure requirements applying to offers that needed disclosure under Part 6D.2 of the Corporations Act. The two individual defendants were directors, Mr Simeon La Barrie and Mr Ewald Hafer.

The Court's declarations show two main types of conduct. On some occasions, offers of securities were made, or application forms were distributed, when no disclosure document had been lodged with ASIC. On other occasions, offers were made, or application forms were distributed, without the application form being included in or accompanied by a compliant disclosure document. For Mr Hafer, the declaration refers specifically to an offer information statement.

The reasons explain that the disclosure document required in this case was an information statement. That matters because an information statement is not a casual investor handout. It is a statutory disclosure document with mandatory content requirements, including audited financial reports prepared for a relevant 12 month period and a range of prescribed statements about the company, the securities, the use of funds, risks and amounts payable.

By the time the matter reached trial, the defendants admitted the contraventions. That narrowed the dispute, but it did not make the case minor. The directors asked the Court to relieve them from liability under sections 1317S and 1318. To obtain that relief, they needed to show, among other things, that they had acted honestly. ASIC sought declarations, penalties, injunctions, disqualification orders and costs.

The Court rejected the directors' attempt to be excused. It said it was not satisfied they had acted honestly and considered their conduct particularly serious. The judge said each had shown a blatant disregard for the law. The Court also linked the contraventions to practical investor harm, stating that 83 affected persons could have no confidence in precisely what they had invested in and had lost avenues of legal recourse that might otherwise have been available. The Court further referred to extreme deficiencies in the company's record keeping.

Because the contraventions were admitted, the central issues were about consequences and relief. The Court had to decide whether the directors should be excused from liability under sections 1317S or 1318, whether declarations should be made, what pecuniary penalties should be imposed, whether disqualification orders were appropriate, whether injunctions should be granted, and whether the company itself should also be penalised.

The Court also explained the legal setting in some detail. Section 727 prohibits making an offer of securities, or distributing an application form for an offer of securities, that needs disclosure under Part 6D.2 unless a disclosure document has been lodged with ASIC. It also prohibits making the offer or distributing the form unless the offer or form is included in or accompanied by the required disclosure document. Section 727(6) makes contravention of those requirements a civil penalty matter.

A practical point from the reasons is that ASIC did not need to prove, for primary liability, that a person knew the offer required disclosure or knew that no disclosure document had been lodged or provided. The Court also noted that the defendants bore an evidentiary burden in relation to whether any exception or qualification in sections 708 or 708AA applied.

The directors' applications for relief turned heavily on honesty. The Court said they had not discharged the burden of showing they had acted honestly. That finding was central to the refusal of relief and to the seriousness with which the Court approached penalty and disqualification.

A particularly useful part of the judgment is the Court's explanation of why section 727 is not just a filing rule. The Court described it as a pivotal provision in the Chapter 6D fundraising regime. In other words, section 727 helps make the rest of the investor protection system work.

The reasons set out several connected parts of that system. A disclosure document used for an offer of securities must be lodged with ASIC. Offers for issue require director consent. There is a waiting period before applications for non-quoted securities can be processed after lodgment. If securities are offered under a disclosure document, money received in respect of the offer must be held on trust until the securities are issued or transferred, or the money is returned. Information statements must also have an expiry date.

The Court then explained the importance of the misleading disclosure provisions. Section 728 prohibits offers under a disclosure document if there is a misleading or deceptive statement, a material omission, or a new circumstance that should have been included. Section 729 can give investors who suffer loss a right to recover damages from a range of people, including the contravener, directors and some information providers. ASIC also has stop-order powers under section 739 in relation to a lodged disclosure document.

The key point is that if no disclosure document is lodged at all, some of those protections are not engaged. The Court said that in such a case the remedial mechanism in section 728 is lost because it applies in connection with a document that meets the description of a disclosure document, which in turn depends on lodgment. Investors may still have other remedies, such as under section 1041H, but those are not the same and may not reach the same array of people. That is why the Court said a person who makes offers of shares without lodging a disclosure document significantly undermines the efficacy of the Chapter 6D regime and deprives investors of some avenues of relief.

The Court also emphasised the content side of compliance. A compliant information statement gives investors audited information about the company's financial position. That is a practical reason the Court treated the contraventions as serious. The problem was not only that ASIC had not received the document. Investors also missed out on the statutory disclosure package they were supposed to receive.

The Court declared that the company and each director contravened section 727(6) on 101 occasions. It refused the directors' applications for relief from liability under sections 1317S and 1318 because it was not satisfied they had acted honestly. The reasons say each director had a blatant disregard for the law.

The Court disqualified Mr La Barrie from managing a corporation for 12 years and Mr Hafer for eight years. It also imposed pecuniary penalties on the directors. The formal orders require Mr La Barrie to pay $2,000,000 and Mr Hafer to pay $800,000 within 60 days, subject to liberty to apply to vary the payment date. One paragraph in the reasons refers to a $600,000 penalty for Mr Hafer, so that point should be checked against the full judgment and sealed orders.

The Court granted injunctions restraining the company, Mr La Barrie and Mr Hafer from offering securities within Australia in the company or in any Australian entity that purports directly or indirectly to be engaged in the commercialisation of information technology, and from distributing application forms for such offers, unless the disclosure requirements in section 727 are met. The restraint period is 12 years for the company and Mr La Barrie, and eight years for Mr Hafer. The orders also require evidence to be provided to ASIC within 48 hours of written request to demonstrate that monies accepted or solicited were not in respect of a restrained offer, subject to any claim of privilege against self-incrimination or exposure to penalty for the individuals.

The company itself was not ordered to pay a pecuniary penalty. The Court reasoned that once the responsible directors were removed from management, the need for specific deterrence against the company was eliminated. The Court also considered that a penalty on the company could ultimately harm shareholders, including people who may have become shareholders because of the contraventions.

ASIC was to have the benefit of a costs order, but the parties were to be heard on the form of that order. The Court also sought further submissions on whether the directors should be prevented from accessing company property to pay their penalties.

The judgment repeatedly shows that fundraising compliance is not just about having a good intention to raise capital. It depends on documents, timing and records. The Court referred to extreme deficiencies in the company's record keeping. That observation matters because poor records make it harder to prove what was offered, what investors received, whether an exception applied, what money was accepted, and whether the company complied with the statutory process.

For a business owner, record keeping should cover at least the offer terms, the identity of investors approached, the date each communication was sent, the exact version of any application form used, the disclosure document that accompanied it, board approvals, legal advice received, and the handling of application money. If your business later needs to show that an offer fell within an exception, or that a disclosure document was properly lodged and provided, those records may be critical.

This case also shows the danger of informal fundraising habits. If directors or staff circulate forms, invitations or investor materials in a piecemeal way, the business may create multiple contraventions across a fundraising campaign. Here, the Court dealt with 101 contraventions over a period of more than four years. Repetition and poor governance can turn a compliance failure into a serious enforcement outcome.

This decision is most relevant to companies raising money by issuing shares or other securities in Australia, especially unlisted public companies. The first practical question is whether the offer needs disclosure under Part 6D.2. The reasons note that sections 708 and 708AA may state when disclosure is not required, but if you want to rely on an exception you need to be able to establish it properly.

The second point is sequencing. If disclosure is required, the disclosure document must be lodged before the offer or application form is used, and the form must be included in or accompanied by the required document. The Court's explanation of section 727 makes clear that these are not optional steps and not matters to tidy up after investor interest has been generated.

The third point is director risk. The Court imposed personal penalties and long disqualification periods on the directors, while declining to penalise the company itself. That is a reminder that directors can face direct exposure for fundraising misconduct, particularly where the Court considers they acted with a blatant disregard for the law.

The fourth point is investor protection. The Court treated the absence of a lodged disclosure document as serious because it deprived investors of audited information and reduced the legal protections otherwise available to them. Businesses should therefore think about disclosure compliance not only as a regulator issue, but as part of the fairness and reliability of the capital raising itself.

Finally, this case is a warning against assuming that admissions will substantially soften the outcome. Admissions may narrow the issues, but they do not prevent the Court from making strong findings about seriousness, refusing relief, imposing large penalties and making long disqualification orders.

The judgment was delivered on 29 August 2025 by Charlesworth J in the Federal Court of Australia. The hearing dates recorded in the judgment were 3, 6 and 7 February 2025. The reasons state that the relevant contraventions related to 101 offers of shares made between 13 March 2019 and 26 July 2023.

The Court made final declarations, disqualification orders, penalties and injunctions, but left costs and a possible order about access to company property for payment of penalties to further written submissions. There is also an apparent inconsistency between the formal orders and one paragraph of the reasons as to the amount of Mr Hafer's penalty.

This page is based on the Federal Court decision Australian Securities and Investments Commission v Open4Sale Global Ltd (No 2) [2025] FCA 1038. The judgment includes the catchwords, orders and substantial parts of the reasons, including the Court's explanation of section 727 and the Chapter 6D fundraising regime.

Readers should note two limits. First, the available reasons are truncated near the end. Second, the formal orders state that Mr Hafer's pecuniary penalty is $800,000, while paragraph 8 of the reasons refers to $600,000. The formal orders are reflected in the outcome section below, but that inconsistency should be checked against the full judgment record.