Some options for offering shares 

The Covid pandemic has paved the way for innovation, and many New Zealanders spent 2020 investing time and money into their new or existing businesses.  

When raising capital to grow their business, however, many business owners find themselves limited by the size of their wallet. While interest rates are currently at an all-time low, trading banks’ lending terms are arguably the strictest in recent memory.  

There are, however, alternatives to using personal funding or borrowings; you can offer shares in the company in exchange for funds (or ‘capital’).    

While this method of capital raising sounds relatively straightforward, it can be a costly and complex process for business owners to navigate. When a business elects to raise capital by offering shares, it is governed by the Financial Markets Authority of New Zealand (FMA) and the Financial Markets Conduct Act 2013 (FMCA). Broadly, the FMA requires any offer of shares to be accompanied by a full suite of disclosure documents in accordance with the FMCA; these disclosure documents are expensive and time-consuming to prepare. The ongoing reporting associated with these activities is also significant and often requires substantial professional assistance from accountants and lawyers.   

A lighter option 

There is, however, another option that is lighter in its compliance requirements. Business owners can limit their share offer to investors who meet the eligible criteria of Schedule One of the FMCA. Schedule One offers are frequently the ideal solution to allow a company to raise capital while only making limited disclosure and, in some circumstances, no disclosure at all.  

Read more here.