Raising capital

Commonly asked questions about Raising Capital and Business Finance

No, ‘proprietary limited’ companies cannot sell shares to the general public. The transfer of shares in a private company is restricted. You can raise money from existing shareholders or employees of the company, or you can fundraise to the public as long as a disclosure document is not required.

Businesses are not permitted to advertise small scale offerings. You can, however, make a personal offer to acquire securities in your company, to as many as parties as you wish, provided this results in no more than 20 investors over any 12-month period. Personal offers can only be made to parties with whom your business has had some former connection, and who may have some interest in the offer. They tend to be existing business associates, relatives or friends, and they do not need disclosure due to their financial capacity, experience or existing association with you.

Disclosure documents are regulated fundraising documents that must be lodged with ASIC when issuing securities for sale to the public. There are four types of disclosure documents:

  • Prospectus – a document inviting parties to subscribe for and acquire shares in a company. Any company can use this type of disclosure document to fundraise. It must include all relevant information about the company to assist would-be investors in their decision to buy shares. There are very specific steps involved in preparing and issuing a prospectus, provided in the Act.
  • Offer Information Statement (OIS) – essentially a summarised prospectus. It can only be used for fundraising up to $10 million, which includes any amount raised under an earlier OIS. The disclosure requirements involved in an OIS are less than for a prospectus.
  • Profile statement – a short statement informing people about an offer, which sets out key information about the company and the offer. Companies can only use profile statements if ASIC has provided approval to do so.
  • Two-part simple corporate bonds prospectuses – a specific type of disclosure applying to offers of ‘simple corporate bonds’. This must include:

– A base prospectus with general information that is not likely to change over the 3-year life of the document.
– An offer-specific prospectus for each offer, containing details of the offer and any updated information from the base prospectus.

The Australian Securities and Investments Commission (ASIC) can provide further information about the regulations around raising money. Due to the complex nature of the law, seeking legal advice is beneficial to ensure that you meet your legal obligations.

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We’ll always be honest and upfront. We’ll look you straight in the eye and agree on a plan before moving forward.
We know the ropes and our professionals have expertise specific to every legal situation—many are Accredited Specialists.
We speak clearly and directly, so you understand our advice and can make decisions with confidence.
We’re local to wherever you are, and our offices are owned and operated by friendly, local professionals, proud of their communities.
We genuinely care about our clients. It’s the core of who we are and has been since the first practice was opened by ER Stack on the NSW Mid-North Coast in 1931.
We make the process easy for you with the latest tech to keep services cost effective—and you in control.

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