Looking To Raise Capital? Section 708 Could Be The Answer!
Section 708 of the Corporations Act enables a private company to bypass the general prohibition that stipulates that a company, that wishes to raise capital from the public, must issue a Prospectus.
Private companies are able to raise up to $2,000,000 in a 12-month period from a maximum of 20 investors by issuing ordinary shares to the new investors.
There is a prohibition against advertising the capital raising. This means that company directors are only able to deal with their close associates and with people with whom they are conducting business who know their company. In other words, the capital raising cannot be promoted to the general public.
Company directors need to monitor the number of shareholders they already have and ensure that the new capital raising will not mean that the company exceeds the 50 shareholder limit which applies to all private companies, except Crowd Sourced Funding Equity Raising Companies.
There is no requirement for any special information to be made available to the potential investors, however normal commercial practice requires that potential investors are supplied:
- The company’s Business Plan
- Budgets and Cashflow Forecasts
- The company’s leadership team details
- The company’s corporate chart relating to their business operations
- Company valuation
- Determination of individual price per share
Many companies will require assistance from an experienced business accountant/consultant who can guide the company through the processes required to raise capital in this manner.
Towers Business Development Pty Ltd is an experienced Business Advisory Services organisation which can assist companies through this entire process:
- Company valuation
- Preparation of Business Plan, Budgets and Cashflow Forecasts
- Other work relative to the capital raising
This week’s free webinar:
- “Crowd Sourced Funding Equity Raising - What’s Available for Companies” - Thursday 22nd July 2021 at 12-noon AEST. To register - click here.
- Early Stage Innovation Company Status - Great For The Company - Investors Love The Incentives” Webinar - 15th July 2021. To view recording - click here.
- Crowd Sourced Funding Might Be The Answer - click here. View recording - click here.
- Grants Can Assist Funding For Research Activities Webinar - 8th July 2021. To view the recording - click here.
Towers Business Development Services
Towers Business Development does not give taxation advice but offers consulting services for small/medium sized enterprises and accountancy businesses, including:
- Advice on a “young company” that has undertaken research and development and wishes to raise funds from the public to be able to undertake the due diligence process to be declared an “Early Stage Innovation Company”
- Assistance in the capital raising process for companies that fit the requirement to be deemed a Crowd Sourced Funding Equity Raising Company
- Assistance with capital raising utilising s708 Corporations Act Capital Raising
- Preparation of Business Plans
- Predictive Accounting – Budgets, Cashflow Forecast, Predicted Balance Sheet
- Virtual Chief Financial Officer Services
- Succession Planning
- Establishment of Research and Development Systems
- Government Grant Advice for SMEs
- Corporate Governance Mentoring
- Business Review Meetings – monthly or quarterly
Upcoming Free Webinars Presented By Towers Business Development
- “Crowd Sourced Funding Equity Raising - What’s Available for Companies” - Thursday 22nd July 2021 at 2.00pm AEST. To register - click here.
- “Using Section 708 of the Corporations Act to Raise Capital” - Thursday 29th July 2021 at 2.00pm AEST. To register - click here.
- “Corporate Governance Issues for SMEs” - Thursday 5th August 2021 at 12-noon AEST. To register - click here.
- “Identifying Grants for Businesses” - Wednesday 11th August 2021 at 12-noon AEST. To register - click here.
- “Business Review Meetings” - Wednesday 18th August 2021 at 12-noon AEST. To register - click here.
- “Planning Funding for Your Business” - Thursday 26th August 2021 at 12-noon AEST. To register - click here.
Want to know more about the services that Towers Business Development can supply to assist your business in its business growth? You are invited to visit the Towers Business Development website; or contact Peter Towers:
Have a great day!