We have many years of experience in advising clients on raising capital finance without having to go to the great expense of listing your company on a stock or investment exchange.
We can assist you in preparing an offer document to ensure that it complies with the relevant exemptions and contains all the information which an investor will want to see so as to ensure peace of mind to you and your investors.
Financial Services and Markets Act 2000
The Financial Services and Markets Act 2000 (FSMA) states that a person must not, in the course of business, engage in investment activity unless they are approved as an authorised person or are exempt.
In order to be an authorised person, you must be authorised by the Financial Conduct Authority (FCA) which can be a long and expensive process.
Under the Financial Services and Markets Act (Financial Promotion) Order 2005 (FPO), there are a number of exemptions that can be utilised in order to allow financial promotions to be made by companies looking to raise finance.
Offer Document/Prospectus
Once we have advised as to whether it is possible to make a financial promotion, it will be necessary for an offer document to be produced setting out the terms of the investment. Care should, however, be taken to determine whether or not the Prospectus Rules (as set out by the Financial Conduct Authority and its Prospectus Directive) will apply to such offer document.
The Prospectus Directive is a single regime throughout the EU which governs the requirements of an offer document and sets out the Prospectus Rules which govern content, format, approval and publication of the offer document.
There are a number of exceptions as to whether the Prospectus Rules will apply, the most common being the number of people to whom the offer is being made to. If the offer is being made to less than 150 persons, then the offer may fall outside of the Prospectus Rules. It is, therefore crucial to limit and control the offer, especially prior to the offer document being issued. The Prospectus Rules may also not apply if the total consideration for the shares being offered does not exceed EUR €100,000 (or the equivalent thereof).
We can assist you in preparing the offer document to ensure that (where applicable) it complies with the relevant exemptions and contains all the information which an investor will want to see.
Managing the offer process
Managing the offer process is very complex and it is necessary to consider compliance with FSMA, the FPO and the Prospectus Rules (in order to ensure that the financial promotion is exempt) as well as other regulations, including Money Laundering Regulations and ensuring that potential investors are who they say they are.
Any financial promotion/offer document that is made/prepared will need to be fully verified by the board of the company. This is a time consuming, but an important process whereby each statement that is made needs to be independently supported so as to ensure that the board are not making any misrepresentations or negligent misstatements.
We can manage the entire share offer on your behalf so as to ensure peace of mind to you and your investors.
Other Considerations
We can also assist in structuring your company and its shares to ensure that the offer being made is attractive to potential investors. This would include:
- Restructuring the company’s share capital;
- Working with tax advisors in relation to potential tax reliefs available to investors, including Enterprise Investment Schemes (EIS) and Seed Enterprise Investment Schemes (SEIS) which gives investors income tax relief as well as potential capital gains tax relief.