On 4 March 2025, the Australian Securities and Investments Commission (ASIC) announced that it had charged the former CEO and CFO of Irexchange Limited (Irexchange) in connection with providing false or misleading information to ASIC contrary to section 1308(2) of the Corporations Act 2001 (Cth) (Act). Additionally, a former company secretary and legal adviser of Irexchange was charged with providing false or misleading information to shareholders and ASIC respectively contrary to section 1308(2) of the Act and making a false or misleading statement to ASIC contrary to section 1309(1) of the Act.
The charges relate to alleged conduct between 20 July 2018 and 14 February 2019 and concern:
- an agreement regarding the shares of the Irexchange founders; and
- information about the nature of the company’s business in the prospectus lodged with ASIC.
IPO background and ASIC investigation
Irexchange was an online grocery marketplace that sought to undertake an initial public offering (IPO) in 2019. The investigation stemmed from a complaint by a convertible note holder, who alleged that Irexchange’s prospectus contained false claims about active customer numbers. Despite rejecting these claims, Irexchange lodged a supplementary prospectus to provide additional detail on customer numbers. Shortly after, ASIC issued an interim stop order on the prospectus and Irexchange entered administration in October 2019.
Legal implications: Sections 1308 and 1309
Section 1308 of the Act concerns offences in relation to the making of false or misleading statements in documents.
Section 1309 of the Act concerns the provision, both knowingly and unknowingly, of false or misleading information by officers and employees of a corporation to directors, auditors, shareholders and the market.
A breach of these provisions may result in civil or criminal liability, depending on whether the individual knowingly made the misleading statement or provided the false information.
Key Takeaways for companies raising capital
Regardless of the outcome of this case, this serves as an important reminder to companies undertaking an IPO or secondary capital raising. Key considerations include:
- ensuring the prospectus contains all the information that investors and their professional advisers would reasonably require to make an informed assessment on whether to acquire securities in the company;
- undertaking a fulsome due diligence process, including verification of statements and identifying omissions from the prospectus; and
- extending this same principle to any other materials used in the promotion or communication of the offer.
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