MyFarm investments are open to investors that are considered as non public investors being either 'eligible persons' under section 5 (2CC) Securities Act 1978 (“the Act”) or fall within one or more of the categories set out in section 3 (2) (a)(i)-(iii) of “the Act”. To ensure adequate disclosure and understanding, the Act provides that otherwise before any offer to the public can be made, an investment statement must be produced, and a prospectus registered; each containing prescribed information. This would take time and incur considerable cost, increasing the amount required to be invested. Any allotments of such securities in breach of these requirements are void, unless an exception (as in this case) or exemption applies.
Section 5(2CB) of the Act provides exceptions or exemptions for certain offers – firstly to "Eligible" persons as per s5(2CC) of the Act who are deemed to be:
1. Wealthy (net assets of at least $2m or annual gross income of at least $200,000 for each of the last two financial years)
2. Experienced in; the industry/business to which the security relates; or investing money
Also secondly in terms of s3(2)(a)(i)-(iii) of the Act to persons being:
3. Relatives or close business associates of the issuer or Director of the issuer
4. Habitual investors
5. Investors subscribing a minimum of $500,000
6. Any other person who can in circumstances not be regarded as a member of the public.
This is based on the proposition that such investors should be in a sufficiently strong position to make their own investment decisions (because of their knowledge or experience of investment matters) and do not require the usual disclosure protections provided by the Act. In terms of the Application for Investment forms one of two eligibility certificates have to be completed on behalf of eligible investors certifying the eligibility on the above grounds (1 & 2 for eligible persons otherwise 3,4,& 6 to a level to satisfy MyFarm in its sole discretion).