Hi All,
For education purposes and to satisfy a curious mind after researching into the market and ASX rules and regulations, my question for a hypothetically soon-to be ASX listed company:
If a Corporate Advisor is advising an emerging pre-revenue Australian technolgy company with shareholder spread by providing an additional 100 names (whilst also raising quantum up to $400k) to achieve the 500 requirement, is the Corporate Advisor allowed to artificially "create" shareholder spread by injecting (or giving) $400k of its own money to each of its ten employees whom will be nominee for their provided 19 personel names? So, 10 employees X 20 names X $2,000 = $400k (achieving shareholder spread and quatum).
In all, Corproate Advisor Fees outweigh the $400k cost.... the client is able to list on ASX and thus happy as shareholder spread achieved.... the employee (as nominee) has a significant upside potential in client shares with no outlay..... seems too good to be true?
Is it legal to artificially create shareholder spread? Is there any insider trading problems? What are the possible repurcussions? Can the employees and/or corporate advisor get fined/ sued/etc? Is this common practice in the ib industry?
Link (page 2, section 3.7):
http://www.google.com.au/url?sa=t&source=web&cd=6…
Would appreciate your thoughts on this.
Thanks.
