The documents were also found to be misleading because they omitted any explanation of other licences required, but not yet obtained, in order to lawfully produce medicinal cannabis.
Medical Kiwi also made false or misleading statements in reference to contractual arrangements it had with Hektares.
It claimed to have signed a partnership agreement with Hektares for the pre-selling of its entire first two years of production, worth $90 million.
However, Medical Kiwi's contract with Hektares was only a "letter of supply intent" which was non-binding and contained a clause which enabled Hektares to terminate immediately.
Karen Chang, FMA acting general counsel, said equity crowdfunding had a lower level of required disclosure than the large companies on the sharemarket, but investors were still protected through the fair dealing provisions of the FMCA.
"Crowdfunding issuers cannot leave out essential information or make misleading statements in their offer documents. Investors need high quality disclosure to be able to make informed decisions and Medical Kiwi has fallen markedly short of the required standards.
"This enforceable undertaking penalises Medical Kiwi, requires the company to carry out a number of actions to address the issues, and holds it to account publicly," Chang said.
In a statement Medical Kiwi confirmed it had given the FMA enforceable undertakings in recognition of "misstatements" during the company's crowdfunding programme.
It said the board of director unreservedly apologised for the misstatements.
Medical Kiwi raised $2 million through the equity crowdfunding. Since then it had raised additional capital, established a medical cannabis cultivation operation in Christchurch and agreed terms for the long-term export sale of significant quantities of dried cannabis flowers to a buyer in Germany.
The statement said Medical Kiwi board was pleased to have concluded matters with the FMA after inquiries spanning more than a year.
"The company cooperated with those inquiries fully from the outset and it will now move promptly to implement the undertakings."
The board said affected shareholders would be advised of the offer to return their money and the reasons for it in January 2022.
In addition, Medical Kiwi would pay the FMA the sum of $250,000 in lieu of a pecuniary penalty, formally adopt policies and practices for governance of company disclosures, and agree to a nine-month restriction on its ability to make further new share issues for a period of time should it choose to seek compliance listing on the NZX or another licensed securities market.
"While we acknowledge that the company breached provisions of the Financial Markets Conduct Act in two areas of information disclosure during our crowdfunding, we note that
the Medical Kiwi business and its governance arrangements have moved on a long way since mid-2020."
The company now had six experienced directors.
"We face the future with confidence and will keep all its shareholders well informed on developments."
