11 October 2011
In an era of sustained lack of availability of bank funding, businesses are increasingly looking elsewhere for investment. In an attempt to assist small businesses in raising finance the Treasury has doubled the threshold at which a FSMA compliant prospectus must be produced where equity investment is being sought.
Producing such a prospectus is a costly and onerous exercise for businesses to undertake and can often be disproportionate to the sums being raised. The new limit of €5m (£4.3m approx.) (previously €2.5m (£2.1m approx.)) is accompanied by an increase in the number of investors permitted in the business, from 100 to 150. This is good news.
Whilst these changes could result in a direct cost benefit to businesses seeking funding, there has been no change to the requirements under the financial promotions regime which will also apply to the raising of such finance and which also impose strict compliance obligations. We have advised a number of clients on regulation and compliance in this area and would be pleased to offer you advice on the important practical as well as legal considerations, particularly in the early stages of the process.
Please contact Scott Wyper, Associate