Accountancy Firms Wanted!
This could easily be an advertisement in small/medium enterprise magazines as small/medium enterprises contemplate trying to raise capital as Crowd-Sourced Funding Companies. Each of these applicants is going to require assistance from accountancy businesses for the directors to achieve their aims.
In fact, based on an expectation that around 10,000 companies might try to raise capital as Crowd-Sourced Funding Companies over the next 12 months, this could mean that 700 accountancy firms are required to be making a strong commitment to Crowd-Sourced Funding.
Q: Where do I start?
A: It’s important that accountancy businesses commit to marketing to your clients and prospects that you are interested in being involved as a consultant for Crowd-Sourced Funding. This could include an article on your webpage, special email to clients and prospects starting a conversation with those people about Crowd-Sourced Funding, a news release which you could send to your local media. Your firm would then be ready to present a seminar and/or webinar on Crowd-Sourced Funding to your clients and prospects
In this way your current clients and prospects will be aware that your firm has a real interest in assisting small medium enterprises, inventors and entrepreneurs in trying to raise capital.
Q: I’m only a small firm.
A: In the main so will be the companies that are trying to raise capital. They are traditionally the clients of small to medium-sized accountancy businesses. A significant number of them will require assistance especially when you consider that they have the potential to raise up to $5 million per annum as a Crowd-Sourced Funding Company.
Q: I’m a little worried about the level of disclosure.
A: The legislation requires significant disclosure if the company, a director, officer or manager has had any problems with ASIC in the past. If this is the case there is a heavy level of disclosure. However, if your client has had no problems with ASIC in the past then the disclosure requirements will be very light.
Q: Who are the potential investors?
A: The Crowd-Sourced Funding Legislation offers significant investment opportunities to small investors who are described as “retail investors” in the legislation. This type of investor has not been encouraged by the law previously to be involved with investments in “start-up” or new technology companies. Retail investors are restricted to a $10,000 investment in a company over a 12 month period and there are extensive investor protection mechanisms in place to protect retail investors.
The other type of investors are wholesale/sophisticated/professional investors who do not receive any direct protection under the legislation and who are able to invest any amount of money that they wish into a Crowd-Sourced Funding Company.
Q: Who are the intermediaries?
A: The Crowd-Sourced Funding Legislation imposes significant responsibilities on intermediaries who are businesses with an Australian Financial Services Licence with a special endorsement for Crowd-Sourced Funding. Your client can deal with any intermediary that they select.
Your client is able to negotiate a fee package that is not specified under the legislation. The fee has to be disclosed in the CSF Offer Document and on the intermediary’s website; but the intermediary and the company are free to negotiate their own deal. Most clients will require some advice from their accountant and their solicitor in these negotiations.
Q: What’s included in the CSF offer document?
A: This is the “de facto prospectus”. The legislation specifically states that a prospectus is not necessary but intermediaries are going to be keen to ensure that sufficient information has been provided in the CSF Offer Document so that questions from potential investors can be answered.
The legislation specifies particular information that must be commented on but there is other information that should be included if the company wants to be able to successfully raise the capital that they have targeted.
This includes what’s the company’s vision and would also include other documentation including market research, marketing plan, intellectual property summary, business plan, budgets and cash flow forecasts, information memorandum, company valuation and share price calculation.
Undoubtedly some of this work will be undertaken by other consultants and the company may have some of these documents already prepared but many of them will require work to be done so that the documents are brought to an acceptable standard and that they support the vision that is being stated by the company’s directors.
Some of your potential clients could also require additional services such as share registry, a director on the board who has financial management experience and auditors. Whilst the legislation says that companies can have a five year exemption from complying with some of the “onerous requirements” of being a public company one of which is the non-appointment of an auditor. A significant number of the companies will probably proceed to appoint an auditor for accountability and corporate governance purposes. If at any time in the five years the total amount of capital raised exceeds $1 million the company then has to appoint an auditor.
Q: What does ESS BIZTOOLS offer?
The Crowd-Sourced Funding Equity Raising Package includes forms, templates, articles, marketing material, webinar and other items to assist an accountancy business to deliver a great service to your clients.
Your investment in this package is only $399 including GST. Subscribers are able to access the material on a 24/7 basis and also will be able to utilise any further updates that are produced over the next 12 months. <Click here for more information and to subscribe>.
We are conducting a special webinar “Introducing a Crowd-Sourced Funding Service” on Wednesday, 17 May 2017 at 12:30pm AEST. Please <click here> to register for this webinar.
If you have any questions on any aspect of the Crowd-Sourced Funding Equity Raising Product Package, please do not hesitate to contact us.
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