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Posted: 16 February 2024
Documentation for investors

Documentation for investors

Business Advisory Services Update

Companies seeking to raise funds from investors by utilising Section 708 of the Corporations Act need to ensure that only ‘personal offers’ are made, and that there is no marketing or advertising relating to the capital raising process.

The legislation does not specify what documentation should be supplied to potential investors.

Sound corporate governance indicates that the following documents would be required by interested but not anxious investors who comply with the requirements of the ‘personal offer’ rules:

Business Plan: identifying the company’s vision and identifying what the capital raised is going to be used for.

Predictive Accounting Reports: comprising budgets – key drivers accounts – cash flow forecasts – projected balance sheets that are prepared as being the ‘financial interpretation’ of the company’s business plan.

Valuation of the Company: normally based on a critical review of the budget forecast and the present value of a 12-month forecast capitalised at a realistic price/earnings ratio.

Statement of the capital to be raised: and the shares proposed to be allocated for that capital.

Statement of any other capital raised in the previous 12 months: this is to ensure that the company does not offend against the 20/12 rule.

Confirmation that the proposed issue of shares will not cause the company to exceed the 50 Shareholder Limit.

The ESS BIZTOOLS‘Section 708 Capital Raising Product Package’ has been developed to assist accountants/bookkeepers to ‘DELIVER ADVISORY SERVICES’ to SME clients.

Want to know more about services that will assist in the ‘DELIVERY OF ADVISORY SERVICES’? Contact us on 1800 232 088 or email .

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