Small scale offerings allow businesses to raise money without the need for disclosure. Stacks will help to ensure that your business meets its legal obligations when raising capital.
Raising capital in order to grow your business is a common goal. Usually, raising money would necessitate a disclosure document, however, there are some exceptions to this rule, such as small scale private offerings.
Under the provisions of the Corporations Act 2001 and associated regulations, the Australian Securities and Investments Commission (ASIC) regulates the way businesses may raise capital in Australia. The laws are complex and it is important that you seek legal advice to determine whether you meet the criteria to be exempt from disclosure.
Stacks Law Firm has specialist commercial lawyers who will ensure that you understand your legal obligations when raising capital. We will be your business partner to make sure that you have the right structures in place to grow your business without falling foul of the law.
What is a small scale offering?
A small scale offering is one way to raise capital without the need for disclosure. Often referred to as the 2/20/12 rule, raising money will qualify as a small scale offering as long as the amount is not in excess of 2 million dollars, and is raised by no more than 20 investors over a 12 month period.
How do you attract investors in small scale offerings?
Businesses are not permitted to advertise small scale offerings. You can, however, make a personal offer to acquire securities in your company, to as many as parties as you wish, as long as this results in no more than 20 investors over any 12 month period. Personal offers can only be made to parties with whom your business has had some former connection, and who may have some interest in the offer. They tend to be existing business associates, relatives or friends, and they do not need disclosure due to their financial capacity, experience or existing association with you.
Need advice about small scale offerings and other ways to grow your business? Call us today