What Should Shareholders, Company Directors and Managers know about Crowd Sourced Funding Equity Raising?
Accountant's Minute 202
- What is in it for a company?
- Ability to raise up to $5 million in a 12 month period direct from the public
- This is not a loan therefore:
- No loan application required
- No security required
- No personal guarantees required
- No monthly repayments of principal and interest required
- The company issues ordinary shares to the investors
- What does your client want to achieve for their company?
- “Scale up”? – They will probably require cash to fund the process
- Expand the business?
- Acquire another business?
- Implement their “big audacious idea”?
- Overcome succession problems?
- Repay loans?
- Implement a commercialisation process for a new product, process or service when your company is too old or has too much income or expenditure to qualify as an Early-Stage Innovation Company?
These are some of the reasons why your client might be interested in having a close look at the concept of utilising Crowd Sourced Funding Equity Raising to raise capital
- What is the downside?
- The company must have a minimum of two directors
- They could end up with hundreds of additional shareholders – but most of them will only have a very small shareholding
- The company’s Constitution will require some changes
- The current shareholders will not own 100% of the company
- But, this is part of “Wealth Creation”
You need to understand the process if you are going to be involved:
- The selection of an Intermediary that your client is confident that they can work with;
- The company has to prepare a Crowd Sourced Funding Offer Document therefore they will probably need you to assist them in this process – this document requires a significant amount of information to be disclosed.
This is not “Crowdfunding”.
All share applications must be processed via the Intermediary’s website.
The maximum investment for a “Retail Investor” is $10,000 in a 12 month period.
There is a 5 business day cooling off period for “Retail Investors”.
Click here if you wish to learn more about Crowd Sourced Funding Equity Raising or go to our website:
www.essbiztools.com.au/crowd sourced funding/ learn more
If you have any question on any aspect of the services provided by ESS BIZTOOLS, please do not hesitate to contact us.
Come to our website to see our “40% Discount Promotion” for the month of July 2019.
Have a great day!
Peter Towers
