When is an Information Memorandum required?

An Information Memorandum is not required by the law. However it is often used in connection with wholesale offers of financial products (i.e. managed funds and debentures).

While not required by law, an Information Memorandum can be useful in disclosing the key terms, features, benefits, costs and risks of the wholesale offer. It can also serve as a useful risk management tool to clarify the terms of the offer and remove ambiguity which may arise if the offer is made verbally or in multiple (conflicting) documents.

Even though an Information Memorandum is not a regulated document, the content must nevertheless be complete and accurate because the issuer can be found to have misled or deceived investors where information in the Information Memorandum is inaccurate (express or by omission) or incomplete.

Lawyers and advisers are often engaged to verify an Information Memorandum to determine whether any information or representations misleading or deceptive. Verification usually involves matching statements and representations against other external source documents (i.e. reports, contracts etc.) to confirm their truth and accuracy and whether any qualifications or disclaimers are required to clarify the statements and representations made.