Legal - Angelloop

Legal Statement

Charitable Purposes

Angel Loop Ltd ATF Angel Loop Charitable Trust (ALCT) 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 a requirement of section 6 of the Charities Act 2013 (c’th) the achievement of the purpose must be for the public benefit. For Innovation it is “that innovative ideas generally be carried through to successful commercial fruition” “which 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”. Charity Registration Certificate can be found Here.

Angel Investment is for public benefit

Angel Loop believes strongly that Angel Investment is ancillary (a necessary requirement) in achieving the public benefit of Innovation. 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 [commercialised] 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 believes that all Angel Investors should have the necessary 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 achievement of the public benefit”. Section 708 of the Corporations Act describes a number of methods to attain the classification of “Sophisticated” especially section 10 (see G.761GA) which permits recognition through prior experience or “professional training” (see EM) . 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. Angel Loop is committed to making available professional training programs. With that, we also recognise, that while being 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.

Exempt Business Introductory Services

Angel Meetings held prior to 1st October 2022 (See 22-267MR) 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. Effective 1st April 2025, RG129 Business introduction or matching services comes into full effect.

While ASIC cannot give legal advice, Angel Loop enquired and received the following statement based on general principles, “it does not appear that Angel Loop needs to rely on the disclosure or hawking relief provided by the business introduction class order because investment offers are only made to sophisticated investors within the meaning of s708(8) or ‘experienced’ investors certified by an AFS licensee under s708(10) – for brevity, I’ll refer to these as ‘exempt investors’. This is the case even if other persons are invited to meetings where entrepreneurial business ideas are to be discussed – provided it is prominently clear in the invitation and at the meeting that any investment opportunities will only be available to exempt investors.”

All Angel Groups associated with Angel Loop are also exempt (by virtue of s911b(1)e). At a meeting, registrations of interest are taken however Angel Loop assesses the registrants Sophisticated Investor status via the QEI (Qualified Early-Stage Investor) regime to ensure that only persons permitted to take up such offers to Invest as made offers. All participants are notified prior to receiving any offer to their QEI status.

Exempt Custodial Service

Angel Loop operates an exempt custodial or depository service to support founders through its wholly-owned subsidiary Angel Loop Nominees Pty Ltd (ALN). This service is exempt under s766E 3(e) and reg. 7.1.40 1(i)(ii) by virtue of the Trustee (ALN) being appointed by ALCT.

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”. Therefore the correct reading states “The assistance given to inventors, though of direct benefit to them, was concomitant or ancillary to its principal object“ . This can only mean the correct interpretation 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.

Angel Loop’s proposed amendment to s761GA Corporations Act.

Currently under ASIC rules, Angel Loop is caught in a licensing “catch-22” situation where, while not ACNC endorsed, is recognised as having an achievement of a public benefit in accordance with the Charities Act 2013 therefore does not require an AFS license as long as its investors are sophisticated (“exempt”). However, to achieve Angel Loop’s charitable purpose requires an AFS license (under 761GA) to exempt those investors. In short, Angel Loop does not need a license because all the investors are exempt but to exempt all our investors needs a license. AngelLoop argues that with its public course, a licensee is not required as there is no action requiring a “determination to be made” by a licensee as the course completion certificate is “self-evident” to an Investors claim of sophistication. Angel Loop made a submission to ASIC for licensing relief. ASIC determination was that the “the Company’s
present request for relief would in effect, amount to law reform.” As such a proposal has been made to the PJC on Corporations. Read submission here.