How to write your disclosure document
The prospectus content standard for securities offerings under RCFA s27. Issuers are players, not law firms: a good Redmont prospectus is one to two pages, written in plain language, and takes under an hour to produce.
Keep it short and honest. One or two pages is enough. A reader should be able to answer three questions afterwards: what am I buying, what could go wrong, and where does my money go. Write it in plain language, no legal filler. The DOC refuses documents that are vague, misleading, or padded (RCFA s27(3)).
Cover block
Offering name, issuer name, exchange it will list on, security type, number of units and price, total raise, date, and who prepared it.
1. Nature of the offering (3 to 6 sentences)
- What the security is: shares, bonds, fund units, and what rights come with it (voting, dividends, interest rate and maturity for bonds, redemption rules for funds).
- What the issuer's business actually does in Redmont, in one or two sentences.
- How many units exist after the offering and what share of the company this offering represents.
2. Risks (4 to 8 bullets, specific to THIS business)
- Name the real ones: key-person risk (one player runs everything), activity risk (the business dies if staff go inactive), market risk (prices of the goods you trade), regulatory risk (pending DOC or court matters), liquidity risk (thin trading on the exchange).
- Generic filler like "all investments carry risk" does not count as a risk disclosure.
3. Use of funds (a short list that adds up)
- Where the raised money goes, line by line, with amounts or percentages, e.g. 60% store expansion, 25% inventory, 15% cash reserve.
- If founders or insiders are paid from the raise, say so explicitly.
4. Financial position of the issuer (a mini balance sheet and one result line)
- Cash on hand, other assets, debts, and last month's profit or loss, in R$.
- If a licensed accountant prepared or checked these numbers, name them. If the company is new and has no history, say that plainly.
Optional but welcome
Management (who runs it, their other ventures), dividend or coupon policy, and how to buy on the exchange.
Worth adding when relevant
Each is a few lines, not a chapter.
- Exact terms of the security: for bonds the interest rate, payment dates, maturity, and what happens on default or early redemption; for shares the class, voting rights, and any transfer restrictions; for funds the fees and redemption rules.
- Ownership and dilution: who owns what before and after the raise, and whether proceeds go to the company or to an insider selling their own units.
- Insider lock-up: whether founders may sell their own holdings after listing, and for how long they will not.
- Corporate status: registered name, Certificate of Incorporation, Company Docket link, directors and officers, and any ongoing court cases or regulatory actions (copy from your Incorporated Entity Summary, RCEA s17).
- Conflicts of interest: dealings with related parties or other ventures of the same owners (RCFA s38 definitions apply).
- Track record: previous raises and what that money did, dividends or coupons actually paid, any defaults. First-time issuers say so plainly.
- Offering mechanics: open and close dates, minimum raise and the refund rule if it is not reached, and where subscriber money is held until listing (escrow with a registered Commercial Bank satisfies RCFA s22).
- Reporting commitment: what you will publish after the raise and where, plus your current audit status on the DOC register.
- Signature block: the directors sign that the document is true and complete, with a date and version number.
When you do NOT need a disclosure document (RCFA s27(4))
These offerings are exempt from the registration requirement by statute. The exemption is from s27(1) only: misleading financial promotions stay unlawful either way (s27(5), s14).
- An offering made only to people who have held an interest in your company, acquired for value, for at least 90 days (s27(4)(a)): rights issues to your own long-term holders.
- An offering to fewer than 10 persons, counting every other offering by you and your affiliates in the preceding 12 months (s27(4)(b)).
- An offering worth less than 500 penalty units in total, counted the same 12-month way (s27(4)(c)).
- Any offering or class the Department exempts by rule or order (s27(4)(d)).
Unsure whether you fit an exemption? Ask for a binding advance ruling (RCFA s20) from your portal before offering: it is free and you may rely on it.
What gets a document refused
- Promised or "guaranteed" returns.
- Missing any of the four sections above.
- Numbers that contradict your tax filings or audits.
- Hiding pending enforcement actions.
- Prospectus links that can be edited after filing (Google Docs links are not acceptable).