The Australian Securities and Investments Commission has accepted an enforceable undertaking (EU) from Barakah Properties following concerns about how it raised money to build an Islamic school in Melbourne.
Barakah Properties had raised money from the local community for investment in the Al Siraat College, in Victoria since 2009.
ASIC made enquiries in December 2015 about the company’s fundraising, its structure, and the kind of information it had provided to potential investors.
ASIC found that the company’s representatives had made recommendations that could have been classified as financial advice without a licence to provide that advice, it had attained funds without disclosing it properly to investors and had exceeded the maximum number of shareholders for a private company, and it had bought back its own shares without following the necessary share buy-back procedures.
Under the EU, Barakah has agreed to:
- Not offer financial advice without obtaining a licence or authorisation;
- Stop offering securities without necessary disclosure to investors;
- Not purchase its own shares without following procedures;
- Remove any advertising of securities that require disclosure to investors from its website;
- Convert from a private company to a pubic one; and
- Write to current investors informing them of the EU and its conditions.
ASIC Commissioner, John Price, said, certain kinds of companies must follow procedures, including disclosing information under the law.
“Companies seeking to raise funds from the public must comply with the disclosure provisions of the Corporations Act,” he said.
“If you have any doubts you should obtain appropriate legal guidance. The EU with Barakah shows what can happen if companies do not adhere to these requirements.”
