How can I get financial support for my company?
I know a company is right for my business but I'm not sure how to go about raising funds and getting investors to make it possible. How can I do this?
Lawyer Answers (1): Answers from lawyers are general preliminary responses. They are not formal legal advice and cannot taken account of all your circumstances. They do not create a lawyer–client relationship.
- The first thing you should know is that not all companies can raise funds from the general public by issuing shares.
- Only public companies with more than 50 non-employee shareholders can raise funds this way.
- However private or 'proprietary limited' companies can raise funds either from existing shareholders and employees or from the public if that fundraising does not require a disclosure statement. Whether this is the case is a complicated matter and you would need to seek legal advice based on the particular circumstances of your case. Our LegalPlan may assist you in finding the right lawyer for your needs.
- If you do decide to raise funds from the general public you must ensure that investors are given certain documents including but not limited to:
- a prospectus,
- an offer information statement and
- a profile statement.
- You may need to engage a financial or business advisor to assist you with these documents. Your lawyer may be able to recommend someone to you.
- Alternatively many business owners will obtain finance from a bank using their personal assets as security and then seek out additional investors to make up the remaining amount.