The Australian Parliament decision to pass legislation to permit unlisted public companies to raise capital from the public from September 2017 is a great initiative for Australian Small Business owners aspiring to raise capital.
The legislation will enable businesses that are currently Propriety Limited Companies to convert to Unlisted Public Companies and they will then be able to finalise documentation to enable them to raise up to $5 million per annum from the public.
Eligible companies will be required to have assets of less than $25 million and turnover of less than $25 million per annum.
The maximum investment that is available for a “Retail Investor” is $10,000 each twelve month period. There will be a “five day cooling off period” for Retail Investors.
There are no restrictions on the amount of investment that a Sophisticated Investor can make.
New unlisted public companies will be able to receive exceptions from some of the more costly government reporting requirements relating to a public company for up to five years including:
- continuous disclosure requirements
- holding Annual General Meetings
- audit of accounts
- providing paper Annual Reports
OBT in Gatton can offer a package of services to businesses aspiring to raise capital from the “crowd” including:
- corporate governance advice on the operations of an unlisted public company
- advice on the structure and operations of the company that has been summarised within a Business Plan
- Budgets and Cashflow Forecasts for a three-year period
- preparation of an Information Memorandum.
There will be other potential requirements including:
- Appointment of an auditor, even though the legislation indicates that companies will be able to avoid appointing an auditor for five years some companies will view the appointment of an auditor as good corporate practice and will wish to appoint an auditor.
- Many companies will be seeking to appoint a director who has financial experience to their Board of Directors (because the company is a public company there will need to be three directors appointed).
Business owners now have a few months to get organised. The Prime Minister indicated when he released the Innovation Statement in December 2015 that the Government believed there were thousands of companies interested in raising capital either through Crowd Funding or through an Early-Stage Innovation Company.