Offer Document

Non-Renounceable Rights Issue

Praemium Limited ACN 098 405 826

Date: 18 September 2012

This offer is for non-renounceable pro rata offer of 1 share for every 8 shares held at an issue price of $0.06 per share

Rights Issue Closing Date: 16 October 2012

Fully underwritten by Canaccord Genuity (Australia) Limited

You should read this document to ascertain whether you are an Eligible Shareholder. This document contains important information and requires your immediate attention. You should read this document in its entirety together with the instructions on the accompanying Entitlement and Acceptance Form regarding your entitlement. If you have any questions about the offer contained in this document or any other matter, you should consult your stockbroker, accountant or other professional advisor.

Chairman's Letter

18 September 2012

Dear Shareholder,

Praemium Limited (Praemium) is pleased to announce that it will be undertaking a 1 for 8 nonrenounceable rights issue to raise approximately $2.4 million. This rights issue offer is separate from the $2 million placement to sophisticated and professional investors announced on 18 September 2012.

On behalf of the Praemium, I am pleased to invite you to participate in a fully underwritten nonrenounceable pro rata rights issue to subscribe for 1 share for every 8 shares held at an issue price of $0.06 cents per share (Rights Issue). The issue price represents a discount of approximately 21% to the Volume Weighted Average Price (VWAP) of Praemium shares calculated over the last 6 months.

You may subscribe for all or part of your rights entitlement determined as at 7.00pm on 26 September 2012. The Rights Issue is only open to shareholders whose registered address is in Australia or New Zealand.

The Offer Document includes important information about the Rights Issue, including:

(1) Key dates and details of the Rights Issue;
(2) Instructions on how to apply for all or part of your entitlement; and
(3) Other important information.

Accompanying this Offer Document is a personalised Entitlement and Acceptance Form which sets out your rights entitlement which you must complete in order to apply for your entitlement. The instructions are on the Form and in this Offer Document.

I recommend that you read this booklet carefully in its entirety and review Praemium's ASX announcements regarding this Rights Issue and generally, before deciding whether or not to participate. The proceeds from the capital raising will be used to fund a number of acquisitions while retaining a solid balance sheet as the Company continues to grow both within Australia and internationally. On behalf of the Board of Praemium, I invite your participation in the Rights Issue and thank you once again for your continued support.

Yours sincerely

Bruce Parncutt Chairman

SECTION 1 – OTHER INFORMATION

About this document

This Offer Document is dated 18 September 2012 and is issued in accordance with Section 708AA of the Corporations Act. Section 708AA allows qualifying entities to make an offer of securities without the need to issue a prospectus. Accordingly, this Offer Document is not a prospectus and does not contain all of the information that an investor may expect to see in a prospectus. This document has not been nor is it required to be lodged with the Australian Securities and Investments Commission.

This Offer Document is open only to persons residing in Australia and New Zealand.

Eligible Shareholders should read this Offer Document in its entirety. By signing the Eligibility and Acceptance Form or paying the Subscription Moneys you acknowledge that you have read and understood this Offer Document.

No representations

No person is authorised to give any information or to make any representation in connection with the Rights Issue which is not specifically contained in this Offer Document. This Offer Document does not constitute the provision of financial product advice.

Future Performance and Forward Looking Statements

Neither Praemium nor any other person warrants or guarantees the future performance of the New Shares or any investment made under this Office Document. Forward looking statements, opinions and estimates provided in the Offer Document are based on assumptions and contingencies which are subject to change without notice, as are statements about market and industry trends, which are based on interpretations of current market conditions.

Forward looking statements including projections, guidance on future earnings and estimates are provided as a general guide only and should not be relied on as an indication or guarantee of future performance. They are subject to known and unknown risks, uncertainties and assumptions, many of which are outside the control of Praemium and the Board, which could affect actual results, performance or achievements expressed or implied by forward looking statements in this Offer Document.

SECTION 2 – DETAILS OF THE OFFER

2.1 Overview of the Offer

The Rights Issue is an offer of 41 million Shares in the Company at its issue price of $0.06 per share to raise approximately $2.4 million.

As at the date of this Offer Document, the Company has 295,227,445 Shares on Issue.

The following table sets out an overview of the Rights Issue

Ratio	1 to 8
Issue Price	$0.06per share
Total to be raised under offer	$2,464,206
Total No of Sharesto be issued	41,070,097fully paid ordinary shares
Total Shares on issue aftercompletion of Rights Issue (fullysubscribed basis)	328,560,778 fully paid ordinary sharesupon the completion of the PrivatePlacement(33,333,333 shares),plus a further 41,070,097 fully paidordinary shares,so that the total numberof shares on issue after completion of theRights Issue and Private Placement willbe369,630,875 fully paid ordinaryshares

Investors should note that after completion of the Rights Issue and the Private Placement, the total shares on issue will be 369,630,875 fully paid ordinary shares. The Private Placement is being offered exclusively to certain sophisticated and professional investors; accordingly, Shareholders may not be able to participate in the Private Placement or be offered Private Placement Shares. Holders of Private Placement Shares will be entitled to participate in the Rights Issue. Investors should note this when assessing whether to participate in the Rights Issue given that the completion of the Private Placement will have a dilutive effect on a shareholders holding in the Company.

2.2 Terms attaching to the Offer

This is a non-renounceable rights issue. As a non-renounceable rights issue you are not permitted to assign, sell or otherwise dispose of your rights under this Rights Issue to any other person; accordingly, there will be no trading of rights on the ASX. Eligible Shareholders who do not take up their entitlement under the Rights Issue by the Closing Date, will lose their entitlement to participate in the Rights Issue and their Shares under entitlement will form part of the Shortfall Shares. The New Shares offered are fully paid ordinary shares that will rank parri passu with all other fully paid ordinary shares on issue.

2.3 Fully underwritten Offer

The Company has entered into an underwriting agreement with Canaccord Genuity (Australia) Limited (Underwriter) in relation to the Rights Issue. The key provisions of the Underwriting Agreement are set out in section 8.

The Underwriter has entered into sub-underwriting agreements with Praemium's Chairman, Mr Bruce Parncutt; Praemium's Managing Director & CEO; Mr Michael Ohanessian; and two non-executive Directors, Mr Bruce Loveday and Mr Peter Mahler, pursuant to which the Underwriter may call on them to subscribe as sub-underwriters.

2.4 Timetable

(a)	Announcement of Rights Issue	18 September 2012
(b)	Shares trade ex-entitlements	20 September 2012
(c)	Record Date (EDST)	26 September 2012
(d)	Dispatch of Offer Document together withEntitlement & Acceptance Form	2 October 2012
(e)	Opening Date (EDST)	2 October 2012
(f)	Closing Date (EDST)	5pm AEDT16October 2012
(g)	Date for notifying ASX of any Shortfall	19 October 2012
(h)	Expected date for allotment of Share anddispatch of statements	24 October 2012
(i)	Expected date for New Shares tocommence trading on ASX	24 October 2012

2.5 Use of Funds

Capital raised under the Rights Issue will be used to fund:

(a) Appointment of Praemium Australia Limited as responsible entity for the Customised Portfolio Service (ARSN 114 818 530).

The Company announced on 18 September 2012 that Praemium's wholly owned subsidiary, Praemium Australia Limited (PAL) has entered into an agreement to replace BlackRock Investment Management (Australia) Limited as the responsible entity of the BlackRock's Customised Portfolio Service (the Scheme). As set out in that announcement, the transaction is subject to a number of conditions precedent. A key condition was satisfied on 4 September 2012 when PAL's Australia Financial Services Licence received initial approval from ASIC to include an authorisation permitting it to operate the Scheme. Final approval from ASIC is subject to the Scheme's members approving the appointment of PAL as responsible entity of the Scheme.

Accordingly, some of the funds raised will be used to meet acquisition and costs associated with transition of the Scheme to PAL.

Where the conditions precedent are not met and Praemium does not replace BlackRock as responsible entity, funds raised will be utilised to pursue other strategic opportunities and fund growth generally.

(b) Increased prudential capital requirements

It is a condition of the Company's varied Australian Financial Services Licence authorisation, that it holds 0.5% of scheme assets as net tangible assets (NTA), capped at $5 million. Based on the Scheme's current assets of $600 million, this equates to a $3 million NTA requirement. These increased prudential capital requirements are prescribed by ASIC and apply to all operators of registered schemes.

(c) Acquisition costs of WealthCraft Systems Limited

Investors will note that the Company announced to the ASX on 18 September 2012 that it had entered into an agreement to acquire WealthCraft Systems Limited. The total acquisition costs are $625,000, of which $400,000 has already been advanced to WealthCraft as a loan. Accordingly, a portion of the funds raised will be applied towards acquisition and initial working capital costs.

A consolidated balance sheet before and after the Rights Issue is set out in section 3.

2.6 ASX Listing Rules

As this offer constitutes a pro rata offer to existing Shareholders, Shareholder approval under ASX Listing Rule 7.1 is not required, nor is the amount raised under this Rights Issue counted towards the 15% threshold for ASX Listing Rule 7.1 as the offer is an exception to the 15% threshold pursuant to ASX Listing Rule 7.2 Exception 1.

SECTION 3 – EFFECT OF OFFER ON PRAEMIUM

Capital raised under the Rights Issue is outlined at section 2.5.

Consolidated balance sheet showing before and after rights issue

	Before RightsIssue$000	PrivatePlacement$000	RightsIssue$000	After RightsIssue$000
Cash	4,336	2,000	2,464	8,800
Other Current Assets	2,938	-	-	2,938
Non-CurrentAssets	1,832	-	-	1,832
Total Assets	9,106	2,000	2,464	13,570

Liabilities	2,055	-	-	2,055
Net Assets	7,051	2,000	2,464	11,515

Total Equity	7,051	2,000	2,464	11,515

The balance sheet impact is shown before transaction costs related to the Private Placement and Rights Issue.

SECTION 4 – COMPANY BACKGROUND

About Praemium Limited and Praemium Australia Limited

Background

Founded in 2001, Praemium is a software provider of investment portfolio technology with strengths in multi-asset administration, particularly direct equities. Praemium's range of portfolio management services is used by accountants, financial advisors, stockbrokers, self-managed super fund administrators and large institutions who usually rebrand and package the services for their own customers.

With the globalisation of financial markets and products, Praemium now operates within a number of jurisdictions, being Australia, United Kingdom, Jersey and Hong Kong.

Australian operations

Praemium is the largest provider of internet-accessed portfolio administration software services. Praemium's portfolio administration services manage a total of 44,678 investment portfolios with a total value at 30 June 2012 of $43 billion. Praemium also provides equities portfolio

administration software services for several of Australia's leading financial institutions and Powerwrap's wrap platform. In Australia this is branded as V-Wrap; this core technology also underpins our wrap platform service and our Separately Managed Account (SMA) technology.

For the financial year ending 30 June 2012, Praemium's Australian business generated sales of $11.1 million and an operating (pre one-offs) EBIT contribution of $3.3 million.

On 4 September 2012, initial approval from ASIC to vary PAL's AFSL was granted to allow it to operate a registered managed investment scheme. On 18 September 2012, Praemium announced that PAL had entered into binding contracts to take over the role of responsible entity of the Scheme which is a registered managed investment scheme. Further details relating to the Scheme and the transaction in general in set out in ASX announcement dated 18 September 2012.

Overseas operations

Praemium launched in the UK in 2006, and today offers both SMARTfund and Discretionary Platform Service (dps). The core dps product (also utilising our proprietary SMA technology) provides advisors and wealth managers with a transparent end-to-end discretionary investment management solution for their clients. The dps service allows financial advisers to select investment models from a broad list of fund managers and to either use models already created or work with a fund manager to create a custom model for their clients. Praemium UK also provides the SMA in Authorised Unit Trusts (AUTs) called SMARTfunds, which deliver a costefficient and transparent retail fund via an online investment platform.

For the 2011/12 year the UK operations had operating expenses of £4.2 million and earned normalized revenues of £1.3 million on average funds on platform (FUM) during the year of £350 million. It remains the Company's expectation that as FUM grows the value of the business will justify the continuing commitment being made by the Company and its shareholders. FUM at the time of issuing this document is £435 million ($AUD 666 million).

Praemium International received the approval of the Jersey Financial Services Commission to extend the dps platform into the international market. An important factor in Praemium's decision to acquire the WealthCraft business is to increase its distribution footprint in the growing Asia market. WealthCraft has a number of important financial advisory clients in the Asia region and they are in the same market that our Jersey-based international platform targets, where clients have expressed considerable interest in the dps offering.

5.1 Eligible Shareholders

Entitlement to participate in the Rights Issue is determined as at the Record Date. Only Shareholders with registered addresses in Australia or New Zealand are eligible to participate.

Eligible Shareholders wishing to accept their entitlement in part or in full should refer to Section 5 of this Offer Document for full instructions.

There is no obligation on Shareholders to participate in the Rights Issue.

5.2 Ineligible Shareholders

In accordance with ASX Listing Rule 7.7, Shareholders with registered addresses outside Australia or New Zealand at the Record Date are not eligible to participate in the Rights Issue as the Company believes that it is unreasonable to make the Rights Issue to these Shareholders due to the small number of such Shareholders, the small number and value of New Shares that would be offered to them and the cost of complying with the securities legislation in those foreign jurisdictions. Accordingly, the New Shares to which any ineligible Shareholders would be entitled will form part of the Shortfall.

5.3 Shortfall Shares

Eligible shareholders who accept their full entitlement may apply for the Shortfall Shares. The terms applicable to an application for Shortfall Shares are identical to the terms set out in this Offer Document.

There is no assurance that Shareholders who apply for Shortfall will be allocated their full application of Shortfall Shares, as the allocation of Shortfall Shares is at the discretion of the Directors. Shareholders may be issued with less (or none) of the Shortfall Shares applied for. In such instances, the Company will refund any surplus funds (without interest).

Eligible Shareholders wishing to apply for Shortfall Shares should do so on the Entitlement and Acceptance Form. Shareholders are bound to accept a lesser number of Shortfall Shares as determined by the Company. An application for Shortfall Share must be for a minimum of $2,000.

As the Rights Issue is fully underwritten, any Shortfall Shares not taken up by Eligible Shareholders will be taken up by the Underwriter.

The Company is permitted to offer the Shortfall Shares to the Underwriter without the issue of a prospectus pursuant to ASIC Class Order 08/35. Shareholder approval for the issue of the Shortfall Shares to the Underwriter for the purposes of ASX Listing Rule 7.1 is not required provided that the Shortfall Shares are issued to the Underwriter within 15 Business Days of the close of the offer (ASX Listing Rule 7.2 Exception 2).

Separate shareholder approval for the purposes of ASX Listing Rule 10.10 (issues of securities to related parties) is not required, as an issue to a related party pursuant to an underwriting agreement is an exception to the requirement to obtain shareholder approval (ASX Listing Rule 10.11 Exception 2). Praemium reserves the right to place any Shortfall to non-related parties within three months of the Closing Date in accordance with the ASX Listing Rules.

5.4 Allotment and Allocation Policy

All Eligible Shareholders who accept their entitlements will be allotted their New Shares. Holding or confirmation statements in relation to the New Shares will be despatched to Shareholders as soon as possible after allotment.

Holding statement will be issued through CHESS. Shareholders who are issuer sponsored will be sent a holding statement by the Share Registry. Holding statements will set out the number of New Shares allotted under the Offer Document and provide details of a Shareholder's Holder Identification Number (for CHESS) or Shareholder Reference Number (for issuer sponsored Shareholders). It is the responsibility of Shareholders to confirm the number of New Shares allotted to them prior to trading on ASX.

5.5 Application for Quotation of the New Shares

Praemium has applied to ASX for official quotation of the New Shares to be issued under the Rights Issue. The fact that ASX may grant official quotation to the New Shares is not to be taken in any way as an indication by ASX as to the merits of the Company or the New Shares.

5.7 Withdrawal of Offer

The Directors reserve the right not to proceed with the Rights Issue at any time before the issue of the New Shares. If the Rights Issue does not proceed, the Company will return all Application Monies without interest as soon as practicable after giving notice of its withdrawal.

5.8 Enquiries

Shareholders with questions on how to complete the Entitlement and Acceptance Form should contact the Share Registry, Link Market Services on 1800 421 712, or 02 8280 7486.

SECTION 6 – HOW TO ACCEPT THE OFFER

6.1 Entitlement and Acceptance Form

An Eligible Shareholder's entitlement will be provided in the Entitlement and Acceptance Form which sets out:

the number of Shares held by them at the Record Date;
the number of New Shares available to them under their entitlement; and
the amount payable upon full acceptance of their entitlement.

Eligible Shareholders wishing to accept all or part of the Rights Issue must complete and lodge an original Entitlement and Acceptance form together with the Application Moneys with the Share Registry. Instructions for completion are included below and on the Entitlement and Acceptance Form.

6.2 Acceptance of the Rights Issue and Payments

The method of acceptance of the Rights Issue will depend on your method of payment, being either:

(a) by BPAY; or
(b) by cheque, bank draft or money order.

Payment by BPAY

For payment by BPAY, please follow the instructions on the Entitlement and Acceptance Form (which includes the Biller Code and your unique CRN). You can only make a payment via BPAY if you are the holder of an account with an Australian financial institution that supports BPAY transactions.

Please note that if you choose to pay by BPAY:

(a) you do not need to submit the personalised Entitlement and Acceptance Form but are taken to have made the declarations on that Form; and
(b) if you do not pay for your full Entitlement, you are deemed to have taken up your Entitlement in respect of such whole number of New Shares which is covered in full by your Application Monies.

It is your responsibility to ensure that your BPAY payment is received by the Registry by no later than 5.00pm on the Closing Date of 16 October 2012. You should be aware that your financial institution may implement earlier cut-off times with regards to electronic payment and you should take this into consideration when making payment.

Any Application Monies received for more than your final allocation of New Shares will be refunded to you. No interest will be paid on any Application Monies received or refunded.

Payment by cheque, bank draft or money order

For payment by cheque, bank draft or money order, you should complete your Entitlement and Acceptance Form in accordance with the instructions set out on that Form and return the Form accompanied by a cheque, bank draft or money order in Australian currency for the amount of the Application Monies, payable to "Praemium Limited" and crossed "Not Negotiable".

Your cheque, bank draft or money order must be:

(a) for an amount equal to $0.06 multiplied by the number of New Shares that you are applying for; and
(b) in Australian currency drawn on an Australian branch of a financial institution.

You should ensure that sufficient funds are held in relevant account(s) to cover the Application Monies. If the amount of your cheque for Application Monies (or the amount for which the cheque clears in time for allocation) is insufficient to pay in full for the number of New Shares you have applied for in your Entitlement and Acceptance Form, you will be taken to have applied for such lower number of whole New Shares as your cleared Application Monies will pay for (and to have specified that number of New Shares on your Entitlement and Acceptance Form). Alternatively, your Application will not be accepted.

Any Application Monies received for more than your final allocation of New Shares will be refunded. No interest will be paid on any Application Monies received or refunded.

Cash payments will not be accepted. Receipts for payment will not be issued.

6.3 Mail

The Rights Issue closes at 5.00 pm on the Closing Date of 16 October 2012. To participate in the Rights Issue, your payment must be received no later than this time on that date. Eligible Shareholders who make payment via cheque, bank draft or money order should mail their completed Entitlement and Acceptance Form together with Application Monies using the reply paid envelope provided with this Offer Document, to:

Praemium Limited c/- Link Market Services Limited GPO Box 3560 Sydney, NSW 2001 Australia

If you would like to hand deliver your completed application and cheque, the address is:

Praemium Limited c/- Link Market Services Limited 1A Homebush Bay Drive Rhodes NSW 2138 Australia

6.4 Partial Acceptance

Shareholders who wish to accept part only of their entitlement should indicate on the accompanying Entitlement and Acceptance Form the number of New Shares they wish to accept and the appropriate Application Monies (calculated at $0.06 cents per New Share accepted). Shareholders must send the completed Entitlement and Acceptance Form with a cheque for the application monies to the Share Registry by the Closing Date per Section above. Eligible Shareholders who do not take up their full allocation will have their shareholding diluted.

6.5 Non-Participation

Shareholders are not obliged to take up their entitlement, either in full or in part. In such circumstances, Eligible Shareholders are not required to take any action.

Eligible Shareholders who do not take up their full allocation will have their shareholding diluted.

6.6 Shortfall Shares

Where Shortfall Shares are to be offered to Eligible Shareholders, only Eligible Shareholders who accepted their full entitlement will be allocated the Shortfall Shares. As the Rights Issue is fully underwritten, the Underwriter is required to apply for all Shortfall Shares in accordance with the Underwriting Agreement.

SECTION 7 – RISK FACTORS

7.1 Introduction

In addition to the general risks attached to any investment in Shares or other securities, there are a number of industry-specific and wider market risks that may affect the future operating and financial performance of the Company and the value of Shares in the Company.

An Investment in the Company and Shares offered under this Rights Issue carry no guarantee with respect to the payment of dividends, return of capital or market value of

the Shares. If you are in doubt about investing in Shares, you should contact your stockbroker, financial planner, accountant, lawyer or other professional adviser prior to making any decision to subscribe for Shares in the Company.

7.2 Business Risks

Competition

Increased competition could result in price reductions, under-utilisation of personnel, reduced operating margins and loss of market share/failure to achieve market share. In the UK, Praemium's business is still being established with competitors including significant institutions with established distribution streams. Certain potential competitors have announced that they are working towards developing and offering competitive products.

The completion of the BlackRock transaction will result in less reliance on Praemium's V-Wrap solution.

Intellectual Property

Currently, Praemium's core assets include its proprietary intellectual property. The commercial value of technology is dependent on legal protections provided by a combination of copyright, confidentiality, trade secrecy laws and other intellectual property rights. These legal mechanisms do not guarantee that the technology will be protected or that the competitive position Praemium holds as a consequence of its unique technology will be maintained.

Praemium has not attempted to patent any of its technologies and does not currently plan to do so in the future, either because such protection is not commercially practical or because it may be unavailable or limited in certain places. To date, Praemium has taken the view that the patenting process, which requires disclosure of key technology and methodologies, poses more risk than benefit to Praemium.

Praemium has entered into software escrow arrangements with certain of its significant clients which require it to deposit source code for its software with an escrow agent so that, in the event of an escrow trigger event occurring, source code will be released to the customer for the limited purpose of allowing them to either transition out of the use of the services without Praemium's involvement or to enable them to maintain and operate the systems that they currently use. These relationships are commercially very common. Trigger points for the release of escrow vary under these arrangements and include material breaches to service agreements and financial triggers. Whilst a release of escrow deposits would not confer ownership of the intellectual property to the beneficiary, it may substantially damage the value of that intellectual property.

Technology development and competition

A significant part of Praemium's future success will depend on its ability to continually enhance existing products, recognise opportunities to develop new products, maintain compatibility with both technology and business systems and processes as they evolve, and to respond to changes to the laws that affect the administration, taxation and management of investments.

Online delivery of services

Praemium's services rely on the Internet. The Internet is not, and cannot be, controlled by any single entity or regulation. Accordingly there are risks associated with any business that delivers its services over the internet. Praemium has disaster recovery and continuity of business protocols and engages third party experts to perform security assessments and penetration testing. Praemium's systems have withstood security tests required by some of the world's largest financial institutions (which have utilised the services of internationally recognised security companies for the purpose of confirming Praemium's security measures).

Customer Retention

Many of Praemium's clients do not have significant barriers to prevent them adopting new technologies or business processes (in comparison to larger institutions). There is a risk that if a superior technology becomes available or there is significant price competition, or when there is a change to a client's management, ownership or business strategy, these clients may move to alternative services. Praemium continues to address this risk by its ongoing commitment to development of its technologies and services and its determination to ensure that its services continue to maintain a competitive edge.

Valuation

No formal or informal valuation has been completed on the technology or assets of Praemium. Praemium makes no representation as to the value of its intellectual property or its business.

Currency Risk

Revenue and expenditure in overseas jurisdictions are subject to the risk of fluctuations in the international currency exchange markets. Some of the funds raised pursuant to the Offer are earmarked for expenditure in the UK. Accordingly, such expenditure will be made in pounds sterling and may exceed the budgeted expenditure if there is an adverse currency movement against the Australian dollar.

Regulatory Change

Praemium provides services to the financial services market. Over recent years the level and complexity of the regulatory environment for financial services in Australia and the UK have continued to increase, bringing with it the increased costs and burdens of compliance which impact on Praemium both directly and indirectly.

Regulatory Compliance

PAL holds an AFSL. The holders of AFSL's must continue to comply with the conditions imposed by the licence in order to maintain it. In the UK, SMARTfund Administration Ltd is regulated by the FSA and authorised to undertake fund management and safe custody activities. In both cases, licensing by ASIC and regulation by FSA, requires adherence to a range of compliance procedures and a constant monitoring of the applicable policies.

If PAL fails to comply with these requirements, it will be at risk of losing its AFSL regulatory status and as a consequence may not be able to continue to provide the service or parts of it.

Loss of data / personal information

Praemium's platforms hold valuable information about investors and their investments. Any corruption, loss or disclosure of that information could result in substantial economic and reputational damage.

7.3 Fund Management Risks

Praemium has obtained the regulatory permissions required to allow its wholly owned subsidiary, SMARTfunds Administration Ltd, to operate the Praemium SMARTfunds as authorised unit trusts under the UK laws. PAL's AFSL has been varied to allow it to operate the Customised Portfolio Service scheme. Undertaking the role of Fund Manager, even where responsibility for investment selection is outsourced to third parties, carries with it risks that are significantly greater than undertaking the role of technology platform provider alone.

7.4 Market for Shares

No assurance can be given that an active market will exist in the Shares or that the Shares will trade at or above the price set out in this Offer Document after the shares have been issued.

7.5 Sharemarket Volatility

Regardless of the performance of Praemium, the day-to-day performance of the share market and general share market conditions may affect Praemium and the price at which Shares trade on a share market such as the ASX. The share market has in the past and may in the future be affected by a number of matters.

SECTION 8 – MATERIAL TERMS OF UNDERWRITING AGREEMENT

This Rights Issue is fully underwritten (100%) by the Underwriter. The Underwriting Agreement contains a number of provisions which are customary of these types of arrangements and includes the following:

Praemium must give the Underwriter a notice of the Shortfall Shares by with 5 business days of the Closing Date. Upon receipt of the notice, the Underwriter is obliged to apply for all residual Shortfall Shares subject to Praemium being in compliance with its obligations under Underwriting Agreement;
The Underwriting Agreement contains a number of termination events upon the happening of which the costs and expenses of the Underwriter must be paid by Praemium. However, the commission referred to above is not payable. The Underwriter will receive an underwriting fee of 4% of the gross proceeds of the Rights Issue. The fee is only payable if the underwriting is completed;
The Underwriter will be entitled to have its out-of-pocket expenses reimbursed by Praemium; these include legal costs, usual travel, accountants costs, advertising and publicity costs and other out-of-pocket expenses (for example, ASX listing fees up to a maximum of $10,000).
The Underwriting Agreement is subject to the underwriter completing its due diligence to its satisfaction and sufficient sub-underwriting commitments (determined in its absolute discretion).

SECTION 9 – ADDITIONAL INFORMATION

Private Placement

The Rights Issue referred to in this Offer Document is not connected with the Private Placement. The holders of the Private Placement Shares will be entitled to participate in the Rights Issue provided that they continue to hold shares as at the Record Date.

Privacy

As a Shareholder, Praemium and the Share Registry have already collected certain personal information from you. If you apply for New Shares, Praemium and the Share Registry may update your personal information or collect additional personal information. Such information will be used to assess your Application, service your needs as a Shareholder, provide facilities and services that you request and carry out appropriate administration. Company, tax law and Antimoney laundering laws requires some of the information to be collected. If you do not provide the information requested, your application may not be able to be processed efficiently, if at all.

Praemium and the Share Registry may disclose your personal information for purposes related to your shareholding, to certain agents and service providers as authorised under the Privacy Act. Under the Privacy Act, you may request access to your personal information held by (or on behalf of) Praemium or the Share Registry. If Praemium or the Share Registry's record of your personal information is incorrect or out of date, it is important that you contact the Share Registry so that your records can be corrected.

Taxation

There may be tax implications associated with participating in the Rights Issue. You should consult your professional tax adviser in connection with the Rights Issue.

Publicly Listed Information

As Praemium is a listed entity, it is required to meet the disclosure obligations in the Corporations Act and the ASX listing rules. Key recent disclosures include:

(a) ASX Announcement dated 18 September 2012 in relation to the WealthCraft acquisition;
(b) ASX Announcement dated 18 September 2012 in relation to the proposed appointment of PAL as the responsible entity of the Scheme;
(c) ASX Announcement dated 18 September 2012 in relation to the fund raising activities of Praemium;
(d) ASX Announcement Appendix 3B dated 6 September 2012 in relation to the issue of Performance Rights; and
(e) Lodgement of FY2012 Annual Report.

Defined Terms

The following definitions apply throughout this Offer Document:

(a) AEST means Australian Eastern Standard Time;
(b) AFSL means Australian Financial Services Licence;
(c) Application Moneys means the amount to be paid for each New Share subscribed for being $0.06 per New Share;
(d) ASIC means the Australian Securities and Investments Commission;
(e) ASX means ASX Limited ABN 98 008 624 691;
(f) CHESS means ASX Clearing House Electronic Sub-register System;
(g) Closing Date means 16 October 2012;
(h) Company means Praemium Limited ACN 098 405 826;
(i) Director means a director of the Company;
(j) Eligible Shareholder means a Shareholder with a registered address in Australia or New Zealand;
(k) Scheme means the Praemium SMA, currently operated by BlackRock as the BlackRock CPS (ARSN 114 818 530);
(l) Listing Rules means the Listing Rules of the ASX;
(m) New Shares means Shares issued pursuant to the Offer (including where applicable, any Shortfall Shares);
(n) Private Placement means the placement of fully paid ordinary securities to sophisticated and professional investors announced on 18 September 2012 to raise $2 million;
(o) Private Placement Shares means shares issued pursuant to the Private Placement;
(p) Rights Issue means the non-renounceable pro rata offer of New Shares to Eligible Shareholders on the basis of one new share for every eight existing Shares held at an issue price of $0.06 per Share;
(q) Record Date means 26 September 2012;
(r) Share means a fully paid ordinary share in the Company;
(s) Shareholder means a holder of Shares in the Company;
(t) Share Registry means Link Market Services Limited, Level 12, 680 George Street, Sydney, NSW 2000;
(u) Shortfall Shares means any Shares offered to Eligible Shareholders which have not been validly accepted by the Closing Date;
(v) Underwriter means Canaccord Genuity (Australia) Limited of Level 4, 60 Collins Street, Melbourne, 3000; and
(w) $ or A$ means Australian dollars. All amounts in this Offer Document are in Australian dollars unless stated.