Private syndicates

Hi all,
I was wondering if there is any restirction for a group of private individuals forming a syndicate to do some property projects ??

eg... If I mention it to some investors who decide to join in, is there any impediment that may prevent us from proceeding...as in ASIC scrutiny or restrictions, or a ceiling on numbers of persons involved or dollar amounts before it requires a pds or asic registration ?

What I have is a proposed structure with a corporate trustee atf a unit trust with the investors taking up units in the trust.

The unitholders remain passive investors, and at the end of the project get a return on their unitholding after which the trust will be wound up.

I was aware that the numbers should be below 20 pax. but someone suggested that there was also a ceiling on the amount the trust can raise before pds, disclosure to asic, etc was required

Is ther any truth in this ??

Thanks for any opinions, in advance.

Kevin

 

Hi Kevin

Yes there are a number of restrictions set out in the Corporations Act to do with fundraising and disclosure. There are also carve outs from the general disclosure obligations and carve outs from the carve outs

The rule you're thinking of is colloquially known as the 20/12/$2m rule. You can raise up to $2m over a rolling 12 month period from no more than 20 retail investors without requiring a product disclosure statement.

There are lots of traps for young players in this area so please get some legal advice. Licensing is particularly tricky.

Would you like to see an article on this issue in the context of property and investing joint ventures?

N.

 

Hi Nigel.

I wonder whether a Series of Articles on Finance Options may be useful?

I'm sure many of us still see the old Bank etc. as the main form of finance but I'm sure there are MANY other ways of raising Capital that may be open to individuals.

Obviously the risks and rates of these options will vary dramatically but it may be an interesting series of articles that could cover from the humble credit card and standard bank home loan through to how large companies secure Capital. Perhaps along the way it could demystify terms such as Mezzanine Finance etc. to people?

Just a thought..............

 

HI Nigel...
I would LOVE to see an article on this issue.

We seem to be heading in that direction with our property investing ( land subdivisions etc.)
Currently am involved in a jv with one other investor, but that is on the basis of utilising a unit trust with our respective family trusts holding the units in the unit trust. We also have a corporate trustee for the unit trust with both of us as directors of the trustee company.

Its a first attempt, and so far is working out well.
Others have expressed and interest in joining us for future projects, hence my original query.

Any articles or opinions would be terrific..

Thanks

KEvin..

 

Alan,
You are spot on with that opinion.

I know lots of investors who are looking into other methods and sources of funding for their investing..

Hows this for a 'wish list'....japanese yen at 1.5%
If the currency moved against you and it doubled would you really care ???? I think not.

Kevin