ASIC Statement

Charitable Purposes

Angel Loop is a registered charitable institution in Queensland for the promotion of a culture of Innovation and Entrepreneurship in Australia. Innovation charities fall within the “Advancing Commerce” charitable classification and the federal court case can be found here.  As required by section 6 of the Charities Act 2013 (c’th) the achievement of the purpose must be for the public benefit so that that innovative ideas generally be carried through to successful commercial fruitionwhich is not only beneficial to the public generally but also a direct benefit to a section of the public, being those members of the public with the inclination and ability to make inventions for commercial purposes and invest in them”. 

Angel Investment is for public benefit

Angel Loop believes strongly that Angel Investment is ancillary (a necessary requirement) in bringing more Innovations to successful commercial fruition to enable the yielding of the public benefit. All “members of the public with the inclination and ability to make investments” need to be provided with a pathway to participate. “equally so that the public generally may enjoy the benefits that the ready availability of new and improved products may bring to increase their material well being.” (see federal test case)

All Angel Investors must be sophisticated

Angel Loop believes in strict compliance with the Corporations Act 2001. Moreover, Angel Loop agrees with ASIC on the need to ensure that all Angel Investors have the suitable financial literacy to understand the risks associated with making Angel Class Investments. However to solely base financial literacy upon wealth is not only discriminatory, but it also contrary to the public benefit of “bringing (more) innovations to successful commercial fruition“. Section 708 of the Corporations Act describes a number of methods to attain the classification of “Sophisticated” especially section 10 which permits recognition through prior experience or education. Angel Loop believes this is the best route forward to unlock the full public benefit of Innovation and enable greater public participation in Angel Investing and for a culture of innovation to flourish more generally. Making available Education programs, we also recognise, that while financially literate some investors may have limited “ability” to invest and as such for tax purposes ITAA 1997 section 360-20 should apply to protect these investors.

Repeal of CO-02/273 Business Introductory Services

Angel Meetings held prior to 1st April 2022 were held under ASIC Class Order [CO 02/273] Business introduction and matching services, which gave conditional relief from the fundraising, financial product disclosure, anti-hawking, and advertising requirements in the Corporations Act 2001. As part of this, it gave relief to the host of the Angel Meeting (Angel Group) from the anti-hawking provisions of the Corporations Act. With its repeal, the host of a meeting where offers of securities are made is required to ensure that and must publicly announce at the start of every meeting, that only Sophisticated Investors are permitted to take up any such offers presented at the meeting. Angel Loop supports our Angel Groups by recognising Sophisticated status via the AQEI (Australian Qualified Early-Stage Investor) regime and ensuring that these Investors are the only persons permitted to take up such offers to Invest.

Angel Meetings will always be open to the public

To comply with our Charitable purposes, all meetings are open to the public. Any member of the public may register to attend a meeting as “the consequent public exemplification of the successful inventive process serves to encourage and entrench innovative initiative in the community” as “the assistance given to individual inventors is educational, informative and practical.” that said, only sophisticated investors are permitted to invest.

Angel Loop and ACNC endorsement

Angel Loop Ltd (ABN: 38 618 764 202) is not currently an ACNC endorsed Charity. Read the AAT decision here. Angel Loop affirms that this decision is an incorrect interpretation of the Test Case. Angel Loop contends that limiting charitability to merely encouragement is too remote moreover deficient to the achievement of the public benefit of Innovation being the “Bringing Innovations to successful commercial fruition” as required by section 6 of the Charities Act 2013. More-over the position is in direct conflict with the Commissioner of Taxation own position in the original test case “the Commissioner said that the promotion and encouragement of innovation, as an end in itself, did not make the object charitable, the Commissioner contended that the community, as distinct from individual inventors, has “only a hope to be benefited”. As per the test case and the correct interpretation (under Word Industries HCA 55 2008) is that encouragement is merely a recognised “power” or activity in the advancement of the charitable purpose and not the charitable purpose in itself and therefore under section 6 of the Charities Act cannot be used to define charitability. 

Further Reading

The Commissioner of Taxation v The Triton Foundation [2005] FCA 1319

Section 708 Corporations Act 2001

Section 360-20 ITAA Act 1997