The success of a business is always centred around money, in both profits and investment, and raising finance is a critical element of this. For many businesses this can be challenging and having advice from corporate solicitors is essential. Lawyers for raising finance will understand the commercial practicalities that procuring a sufficient amount involves, and how to avoid potential pitfalls, whilst putting your company in the most financially beneficial position possible.
Oratto member solicitors for raising finance
Oratto has been developed as an online method of connecting high end solicitors with those who require legal services. Seeking knowledgeable legal advice at an early stage will give your company the best chance of successfully raising the finance you need. You can connect with any of the corporate solicitors on this page immediately, or, if you prefer, you can forward your details to Oratto and we will use the Match facility to identify the best lawyer for your needs. Accessing high quality legal advice through Oratto is a simple, easy process.
One of the first things to consider when you're looking to raise finance is whether there are any obligations that arise under the Financial Services and Markets Act (FSMA); the body which regulates the raising of finance and due diligence obligations must be fulfilled through a third party. Their role is to review and then verify the content of any materials which have been issued pertaining to fund raising. FSMA requirements apply to all companies, unless they are exempt on certain, specified grounds.
The consequences of failing to comply with the FSMA can be serious, and, as such, it's worth ensuring that your compliance is absolute. The failure to comply itself constitutes a criminal offence, the penalties for which can be punitive. There is no limit on the financial penalties that can be imposed and these can take the form of both compensation and fines issued by the Financial Conduct Authority (FCA). Bad publicity for the company and its directors then becomes an issue as FCA decisions are made public.
The Prospectus Rules
Industry protocol demands that potential investors are protected from making unwise investments. A detailed prospectus is the tool used to facilitate this. The document lays out the details of:
- financial reporting and accounts
- tax payments
- legislation compliance
- the company's specific business details
In general terms, a prospectus will be needed if there is "an offer of securities to the public". This is a broadly defined category which covers any type of communication made which is intended to set out a solid block of information for potential investors to rely on when they are making decisions about whether to buy or subscribe to the specified securities.
When determining whether or not a prospectus is required, the offer of ‘securities' must be assessed to see if they fall within the remit of the EU Prospectus Directive. If the Prospectus Rules apply, that will mean an increase to the costs of raising finance due to the time-consuming nature of the examination of the company. Once this has been done, it then needs to be signed off by an FCA accredited person. This will often be a broker who, again, will charge a fee. Your Oratto member lawyer will be able to give you specific guidance on whether a prospectus is needed or not.
However, there are certain exemptions and if a company falls into one of these, they won't need to prepare a prospectus:
- if shares are being offered as part of a takeover, demerger or merger
- if any one person has invested a minimum of EUR 100,000
- if the amount for the securities offered is not more than EUR 1,500,000
- if the offer is intended for less than 150 people per EEA state
For further information on raising finance and the roles of the FCA and FSMA, contact Oratto today.