An information memorandum (IM) is the document you hand a prospective investor to raise the equity in a development, and in Australia you can only use one when every investor you approach sits inside a disclosure exemption in the Corporations Act 2001 (Cth). It is a private offer document, not a public one. Cross the line into a public offer and you needed a prospectus instead, which changes your liability, your cost, and your timeline. Get the numbers wrong and you can be personally on the hook for a forecast that did not come true.
Most of what ranks for “information memorandum” is written for a business sale or a generic capital raise. This guide is written for a developer with a site, a feasibility that stacks, and an equity gap you cannot fill from your own balance sheet. It covers what the document is, when the law lets you use one, what belongs inside it for a development deal, how to present forecasts without misleading anyone, and one duty trap that has caught developers raising money exactly this way. None of this is legal or financial advice, and every deal sits in its own context, so treat it as a map and confirm the detail with your own adviser before you send anything.
What is an information memorandum, and how is it different from a prospectus or Product Disclosure Statement (PDS)?
An information memorandum (IM) is a private offer document that sets out an investment opportunity, its terms, and its risks for a defined group of investors who do not need the full protection of a regulated disclosure document. For a development, it is the document that raises the ordinary and preferred equity sitting above your senior debt. It is not itself a form of regulatory approval. It exists only because your offer qualifies for an exemption from the formal disclosure rules.
A prospectus, an offer information statement (OIS), and a profile statement are the “disclosure documents” defined in Chapter 6D of the Corporations Act 2001 (Cth). A Product Disclosure Statement (PDS) is the Chapter 7 equivalent used for managed investment products offered to retail clients. These documents carry prescribed content, deep due diligence, and a statutory liability regime. You reach for one when you are offering securities or interests to the public, including retail investors. An information memorandum (IM) is what you use when you have structured the raise so that no disclosure document is required at all, because every investor is a sophisticated, professional, or otherwise exempt investor.
The practical difference is cost, time, and reach. A prospectus can take months and a large advisory bill to prepare and lodge with the Australian Securities and Investments Commission (ASIC). An information memorandum (IM) has no prescribed form, is not lodged with the regulator, and can be produced on a developer’s timeline. The trade-off is that you cannot offer to the general public, and you have to be able to prove that each investor qualified for the exemption you relied on.
Why developers confuse an information memorandum with a disclosure document
The confusion usually comes from treating the information memorandum (IM) as if its private status makes it lightly regulated. It does not. The document is exempt from the prescribed disclosure rules, but it is not exempt from the anti-fraud and misleading-conduct provisions of the Corporations Act 2001 (Cth), which apply to any offer of a financial product. You can still be liable for a statement in an information memorandum (IM) that is misleading or that rests on a forecast without reasonable grounds, and that liability can reach the directors personally.
The second source of confusion is the word “memorandum”. A Land Information Memorandum (LIM) in New Zealand is a council report about a property, and an “information memorandum” in a business sale is a marketing document for buyers. The capital-raising information memorandum (IM) discussed here is a securities offer document, and the rules that govern it are securities rules, not planning or conveyancing rules. Keep those apart, because the diligence an equity investor runs on your document is not the diligence a purchaser runs on a site.
When can you use an information memorandum instead of a prospectus?
You can use an information memorandum (IM) instead of a prospectus only when every investor you make the offer to falls inside a disclosure exemption in section 708 of the Corporations Act 2001 (Cth). If even one investor does not qualify, that offer needed a disclosure document, and the fact that you called your document an information memorandum (IM) does not save you. The exemptions that matter most for a development raise are small-scale offerings, sophisticated investors, and professional investors.
Securities law here is federal. The Corporations Act 2001 (Cth) and the Australian Securities and Investments Commission (ASIC) apply the same way in every state and territory, so the disclosure test does not change if your site is in Perth rather than Parramatta. The part that does change state by state is duty, which is covered further down.
Small-scale offerings: the 20 investors and $2 million rule
A small-scale offering lets you issue securities to up to 20 investors and raise up to $2 million in any rolling 12-month period without a disclosure document, under section 708(1). Both ceilings are counted across a rolling year and across all your personal offers of that body’s securities, so you cannot reset the count by splitting a raise into tranches. Go to a 21st investor, or tip over $2 million, and that offer falls outside the exemption.
Two conditions tend to catch developers. First, each offer must be a “personal offer”, meaning it can only be accepted by the specific person it was made to, which rules out anything that looks like a public solicitation. Second, the 20 and $2 million caps count issues, so if you are also relying on other exemptions for some investors, keep clear records of which investor came in under which limb. A small townhouse or boutique apartment raise of, say, $1.5 million from a dozen known investors can generally sit comfortably inside this exemption. A larger scheme usually cannot, which is where the sophisticated and professional investor limbs come in.
Sophisticated investors: the $500,000 and $2.5 million tests
The sophisticated investor exemption in section 708(8) is the workhorse of most development raises, and it can be met in a few ways. The simplest is the amount test: if the minimum amount payable by the investor on acceptance is at least $500,000, no disclosure document is required for that offer. The second is the assets and income test, where a qualified accountant certifies that the investor has net assets of at least $2.5 million or gross income of at least $250,000 in each of the last two financial years. That certificate can be relied on for two years from the date it is given.
There is also a licensee route under section 708(10), where an Australian financial services licensee is satisfied on reasonable grounds that the investor has enough previous experience to assess the offer, and gives a written statement of the reasons for that assessment. This route does not need an accountant’s certificate, but it does need a licensee willing to make and document the assessment.
Those dollar thresholds are worth watching, because they have been debated but not changed. The $2.5 million and $250,000 figures have sat at their long-standing levels for more than two decades, and proposals to lift them to roughly $4.5 million and $450,000 have been floated in reviews without being legislated. As at this guide’s date they remain at $2.5 million and $250,000, but confirm the current figure before you rely on it, since a change would shrink the pool of investors your information memorandum (IM) can reach.
Professional investors: the $10 million and licensee categories
The professional investor exemption in section 708(11) covers the largest and most institutional investors, and it carries no dollar-per-offer minimum. It includes holders of an Australian Financial Services Licence (AFSL), persons who control gross assets of at least $10 million (including assets held by an associate or under a trust they manage), listed entities and their related bodies, and trustees of large superannuation funds. If your equity is coming from a fund, a family office with a licence, or a large corporate, this is usually the limb they fall under, and an information memorandum (IM) is the normal document for that offer.
The table below sets out the main limbs a development raise relies on. In each case the point is the same: the exemption belongs to the offer, so you have to be able to show that each investor qualified at the time you made the offer to them.
| Exemption | Section | Test | Watch-out |
|---|---|---|---|
| Small-scale offering | s708(1) | Up to 20 investors and up to $2 million in any rolling 12 months | Counts across all personal offers; must be genuine personal offers |
| Sophisticated (amount) | s708(8)(a) | Minimum $500,000 payable on acceptance | The whole minimum must be payable, not drip-fed |
| Sophisticated (certificate) | s708(8)(c) | Accountant certifies $2.5 million net assets or $250,000 income (2 years) | Certificate valid two years; keep it on file |
| Sophisticated (licensee) | s708(10) | Licensee satisfied investor has relevant experience | Needs a written statement of reasons |
| Professional investor | s708(11) | Australian Financial Services Licence (AFSL) holder, $10 million gross assets, listed entity, large super fund | No per-offer minimum, but proof of status still needed |
Does your raise become a managed investment scheme?
Pooling money from passive investors can turn your project vehicle into a managed investment scheme (MIS), which brings a separate and heavier set of obligations on top of the disclosure question. Under section 601ED of the Corporations Act 2001 (Cth), a managed investment scheme (MIS) generally has to be registered with the Australian Securities and Investments Commission (ASIC) if it has more than 20 members, or if it is promoted by a person in the business of promoting managed investment schemes. A registered scheme needs a responsible entity that is a public company holding an Australian Financial Services Licence (AFSL) with the right authorisation, which is a serious undertaking for a single development.
The usual way developers avoid registration is to keep the scheme wholesale-only. A managed investment scheme (MIS) does not have to be registered if all interests are issued without needing a Product Disclosure Statement (PDS), which broadly means issuing only to wholesale clients such as the sophisticated and professional investors described above. Even then, the operator generally needs to hold or operate under an Australian Financial Services Licence (AFSL) to issue and deal in those interests, unless a licensing exemption applies. This is why many developers raise through a corporate authorised representative arrangement or a licensed trustee rather than trying to hold a licence themselves.
Two triggers catch people. The member-count trigger means a raise that quietly grows past 20 members can tip into registration territory even if each investor is wholesale. The promoter trigger means a developer who repeatedly raises money for projects can be treated as being in the business of promoting schemes, which can require registration regardless of member count. If your raise looks like a fund rather than a one-off, get advice on structure before you circulate the information memorandum (IM), because the structure decision is far cheaper to make before the document goes out than after. For the structuring detail, raising development equity through a syndicate covers the wholesale-versus-retail line and the licensing options.
What goes in a property development information memorandum?
A property development information memorandum (IM) should answer, in order, the questions an investor’s diligence will ask: what is the opportunity, what are the numbers, how is the deal structured, what are the risks, and who is running it. There is no prescribed form, so the discipline is to include what a careful investor needs to make a decision, and to make every claim one you can stand behind. A thin document does not only read badly, it raises the liability risk, because a gap can itself be misleading if it leaves out something an investor needed to know.
The opportunity: site, control and planning status
Lead with the deal, not the developer’s biography. State the site, the proposed product, the planning status, and how you control the land. Control matters because an investor is funding a project that may not yet own its site, so make clear whether you hold the land, hold it under contract, or hold it under an option. If you are using a put and call option to control the site while you raise, say so, because the option terms and expiry drive the timetable the investor is buying into.
Planning status is the other half of the opportunity. A site with a development approval in hand is a different risk to a site relying on a rezoning or a planning proposal, and the memorandum should not blur the two. Set out what approval exists, what is still to be obtained, and the realistic timeframe, because an investor pricing the risk needs to know whether they are funding a shovel-ready project or a planning play.
The numbers: feasibility, returns and the assumptions behind them
The financial section is where a development information memorandum (IM) is won or lost, and it should present the feasibility, the returns, and the assumptions those returns depend on, not just the headline. Investors in a development typically want to see the total development cost (TDC), the gross realisation value (GRV), the project profit and development margin, and the returns to their capital expressed as an internal rate of return (IRR) and an equity multiple. Present them as a base case with the key inputs shown, so the reader can see what sits underneath the number.
Just as important is the timing. A development’s profit and its cash are not the same thing, and an investor’s return depends on when money goes in and when it comes back. A month-by-month cashflow model showing the drawdown of equity, the peak funding position, and the timing of settlements gives an investor a far clearer picture than a single profit figure. This is where a feasibility model does the work: Feasly produces the internal rate of return (IRR), net present value (NPV), development margin, and month-by-month cashflow from one model, and lets you flex the inputs so the assumptions behind the return are visible and testable rather than asserted. Whatever tool you use, the numbers in the memorandum should trace back to a model you can defend line by line.
The deal: capital structure and the equity waterfall
Set out where the investor’s money sits in the capital stack and how returns are shared. An investor needs to know whether they are coming in as preferred equity that ranks ahead of the developer’s ordinary equity, or alongside it, and what that ranking means if the project underperforms. Be specific about the amount being raised, the minimum parcel, the total equity in the deal, and the senior debt sitting below it, because the loan to value ratio (LVR) and the equity buffer are what stand between the investor and a loss.
Then explain the split. The equity waterfall is the order in which cash is returned and profit is shared: return of capital first, then a preferred return to a hurdle, then the developer’s promote above it. Two deals with the same project profit can hand an investor very different cheques depending on how the waterfall is written, so the memorandum should show a worked example of the distribution at the base case, and ideally at a downside, so the investor can see how their return behaves if the project comes in under plan.
The risks, in plain terms
State the risks plainly and specifically, not as a generic disclaimer. A development carries planning risk, construction and cost risk, sales and market risk, funding and interest rate risk, and timing risk, and an investor is entitled to see the ones that actually bear on this project. Vague risk language does not protect you. A risk section that lists every conceivable risk in boilerplate can be less useful, and arguably more misleading, than a short section that names the two or three risks most likely to move this deal and explains how they are managed.
The honest version of this section tends to build trust rather than erode it. An investor who has done a few deals knows a development is not risk-free, and a memorandum that pretends otherwise reads as either naive or evasive. Set out the real risks, what could go wrong, and what mitigates each one, and let the investor price it.
The people and the governance
Cover who is behind the project and how the money will be governed, because an equity investor is backing a team as much as a site. Set out the developer’s track record, the key consultants, and the roles, then explain the governance: who signs cheques, how decisions are made, what reporting the investor will receive, and what happens if there is a cost overrun or a capital call. For anything structured as a trust or a syndicate, the constitution or deed governs these questions, and the memorandum should summarise the terms an investor is agreeing to rather than bury them.
How do you present forecasts without misleading investors?
Every forward-looking number in an information memorandum (IM) has to rest on reasonable grounds, or the law treats it as misleading. Under section 769C of the Corporations Act 2001 (Cth), a representation about a future matter made without reasonable grounds is taken to be misleading. Because a development forecast, whether it is a sales rate, an end value, a construction cost, or an internal rate of return (IRR), is a representation about a future matter, this provision goes to the heart of your financial section. It is not enough that you believed the number. You have to have had reasonable grounds for it at the time you made the representation.
This connects to the broader prohibition in section 1041H, which makes it unlawful to engage in misleading or deceptive conduct in relation to a financial product or service. An information memorandum (IM) is not exempt from these provisions just because it avoided the prescribed disclosure rules. The Australian Securities and Investments Commission (ASIC) sets out its expectations for forward-looking numbers in Regulatory Guide 170 (RG 170) on prospective financial information, which broadly asks that prospective financial information be relevant, reliable, and supported by reasonable grounds at the date it is given.
In practice, reasonable grounds for a development forecast tends to mean a few things. Base your end values on current, comparable evidence rather than optimism, and date the evidence. Base your construction cost on a real quantity surveyor’s estimate or a builder’s price, not a per-square-metre guess. Show the assumptions, so an investor can see what the forecast depends on. And show what happens if the key inputs move, because a return quoted as a single number with no sensitivity around it invites the question of whether the ground under it was ever tested. Running the deal as a base case with clearly labelled downside scenarios, rather than a single confident figure, is both better disclosure and a better defence, and a feasibility model that flexes inputs and compares scenarios side by side makes that testing part of the workflow rather than an afterthought. Keep the working papers that support each forecast, because reasonable grounds is judged on what you could show at the time, not on how the project actually turned out.
The landholder duty trap when you raise equity through an information memorandum
Raising equity by issuing shares or units to multiple investors under one information memorandum (IM) can trigger landholder duty on your project’s land, even where no single investor takes a large stake. This is the trap most generic capital-raising guides miss, and it is a direct hit to project margin, because duty is a real cost that comes out of the deal. It turns on state duty law, not on securities law, so it is the part of a raise that changes depending on where your site is.
What Oliver Hume decided
In Oliver Hume Property Funds (Broad Gully Rd) Diamond Creek Pty Ltd v Commissioner of State Revenue [2024] VSCA 175, the Victorian Court of Appeal held that 18 investors who subscribed for shares in a landholding company under a broadly circulated information memorandum (IM) had made “associated transactions” that were liable to landholder duty. The company had used the memorandum to raise $1.8 million to fund a development, and issued 1.8 million shares to the 18 investors on the same day. No single investor held more than about 11 per cent, and some interests were as small as 2.8 per cent, all well below the significant-interest threshold that normally has to be crossed before duty applies.
The Court found the acquisitions could be aggregated because they formed “substantially one arrangement”. The investors were all coming in through the same memorandum, at the same time, into a single-purpose vehicle set up to carry out one development and be wound up at the end of it. That “oneness” was enough to treat the separate small acquisitions as one dutiable transaction. The State Revenue Office (Victoria) subsequently invited voluntary disclosures from others who had raised capital the same way. The practical lesson for a developer is that structuring a raise as lots of small stakes does not, on its own, keep it under the duty threshold if the whole raise is really one arrangement.
How landholder duty differs by state
Landholder duty applies across the states and territories, but the land-value threshold and the significant-interest level differ, so where your site sits changes the exposure. Landholder duty is charged when a person acquires a significant interest in an entity that holds land above a set value, and the “substantially one arrangement” reasoning from Oliver Hume shows that acquisitions by separate investors can be aggregated. A feasibility model will not calculate duty for you, so treat the figures below as a prompt to check the current position with the relevant revenue office and to carry the resulting cost into your feasibility as a line item, not as a settled number.
| State/Territory | Land value threshold | Typical significant interest (private) | Primary source |
|---|---|---|---|
| New South Wales | $2,000,000 | 50% company, 20% unit trust (from 1 Feb 2024) | Revenue NSW |
| Victoria | $1,000,000 | 20% private unit trust, 50% private company | State Revenue Office Victoria |
| Queensland | $2,000,000 | 50% | Queensland Revenue Office |
| Other states and territories | Varies (commonly $500,000 to $2,000,000) | Commonly 50% for private entities | Check the relevant state or territory revenue office |
New South Wales and Victoria are where most development raises happen and where the rules are most developed, so lead your structuring there. In New South Wales, landholder duty applies once the entity’s land is worth $2 million or more, with a significant interest of 50 per cent for a private company or 20 per cent for a private unit trust from 1 February 2024. In Victoria, the threshold is $1 million, with a 20 per cent significant interest for a private unit trust, and the aggregation reasoning from Oliver Hume applies squarely to a capital raise. Queensland sits close to New South Wales on the threshold. For Western Australia, South Australia, Tasmania, the Australian Capital Territory, and the Northern Territory, the mechanism is broadly similar but the threshold and the significant-interest level vary, so confirm the current figure with the relevant revenue office before you set the structure. The point for margin is simple: model the duty as a possible cost of the raise, and get advice on structure early, because the difference between a raise that attracts landholder duty and one that does not can be the difference between a deal that stacks and one that does not.
New Zealand: wholesale investor rules, and why an information memorandum is not a land information memorandum
New Zealand developers use an information memorandum (IM) the same way, but the exemptions come from the Financial Markets Conduct Act 2013 (FMCA) rather than the Corporations Act. Under the wholesale investor exclusions in Schedule 1 of the Financial Markets Conduct Act 2013 (FMCA), an offer made only to wholesale investors does not need a Product Disclosure Statement (PDS) or entry on the Disclose register. The wholesale categories broadly mirror the Australian ones: an investment business, a person meeting investment-activity criteria (owning or trading financial products of at least NZ$1 million), a “large” person (net assets or turnover over NZ$5 million in each of the two prior financial years), a government agency, and an eligible investor who certifies their own experience with that certification confirmed by an accountant, lawyer, or financial adviser.
There is also a minimum-investment safe harbour: an offer where the minimum the investor must pay on acceptance is at least NZ$750,000 can generally be made to that investor as a wholesale offer, subject to a prescribed warning. The Financial Markets Authority (FMA) has scrutinised how the wholesale exclusions are used, so a New Zealand raise should keep clean evidence that each investor qualified, in the same way an Australian raise should.
One naming point trips up developers who work on both sides of the Tasman. A Land Information Memorandum (LIM) in New Zealand is a completely different document to the capital-raising information memorandum (IM) in this guide. A Land Information Memorandum (LIM) is a property report a council must produce under section 44A of the Local Government Official Information and Meetings Act 1987 (LGOIMA), covering things like natural hazards, drainage, consents, and rates owing on the land. It is part of your site due diligence, not part of your capital raise. Do not confuse the document you give an investor with the document a council gives you about the land.
How the information memorandum fits your feasibility and capital stack
The information memorandum (IM) is the packaging around a feasibility, so the quality of the memorandum can never be better than the model behind it. Everything an investor cares about, the return on their capital, where it sits in the capital stack, how the profit is split, and what happens on the downside, comes out of the feasibility. If the model is loose, the memorandum inherits that looseness, and the reasonable-grounds problem discussed above follows. If the model is tight and the assumptions are evidenced, the memorandum has something solid to present.
This is the practical reason to build the raise off a proper feasibility rather than a spreadsheet you patch as you go. A model that back-solves the equity you actually need, sizes the peak funding position, and shows the internal rate of return (IRR) and cashflow to an investor under a base case and a downside gives you the numbers the memorandum needs and the working papers that support them. Those outputs, the returns, the margin, the funding stack, and the month-by-month cashflow, are the same figures an investor’s diligence will ask you to justify. The memorandum is the story; the feasibility is the evidence, and the two have to match.
Common information memorandum mistakes developers make
The most expensive mistakes with an information memorandum (IM) come from treating a securities offer like a marketing exercise. A few recur often enough to be worth naming directly.
Can you advertise your information memorandum to the public? Generally no. A small-scale offering under section 708(1) has to be made up of genuine personal offers, and broadly advertising a wholesale offer can undermine the exemption you are relying on and stray into an offer that needed a disclosure document. The advertising restrictions in section 734 of the Corporations Act 2001 (Cth) sit around this, and the “broadly circulated” memorandum in Oliver Hume is a reminder that wide distribution can create problems on more than one front. Keep the offer to identified investors you have a reason to believe qualify.
Can you use one information memorandum for both retail and wholesale investors? No. The document is exempt only if every investor it is offered to is exempt. Mixing in a single retail investor means that offer needed a disclosure document, so if you want to reach retail money you are in prospectus or Product Disclosure Statement (PDS) territory, which is a different and heavier process.
Do you still need proof if an investor tells you they are sophisticated? Yes. The exemption belongs to the offer, so you have to hold the evidence, whether that is the accountant’s certificate for the assets or income test, the record of the $500,000 minimum, or the licensee’s written statement of reasons. Reconstructing this after a dispute is far harder than collecting it at the time.
Does a disclaimer fix a weak forecast? No. A disclaimer does not cure a representation about a future matter that lacked reasonable grounds when it was made. The fix is to have the grounds, keep the evidence, and present the number with its assumptions and a sensitivity around it, not to bury an untested figure under a paragraph of caveats.
Before you send an information memorandum (IM), the short version is this: confirm every investor fits an exemption and keep the proof, check whether your vehicle has become a managed investment scheme (MIS), model the landholder duty position for the state your site is in, and make sure every forward number traces back to a feasibility you can defend. Do that, and the memorandum does its job, which is to raise the equity your deal needs without creating a liability you did not price. This guide is general information, not advice, so run the structure past a securities lawyer and your accountant before you rely on it for a live raise.