Via the NBR in print, is Andrew Lewis’s excellent primer on the April and December changes introduced by the Financial Market Conduct Act. It’s a timely reminder. One change is that certain small offers, those under $2 million per year with less than 20 investors, are exempt from the complicated disclosure documents. These must be offered as a ‘personal offer’ to anyone who “is likely to be interested” in offers of this kind, and who must have gross income of over $200,000 per year or financial investments over $1 million (etc.).
Lewis also says that the requirement for accountant certification of gross income is now absent, so investors can self-certify and get on with it.
All this is good, and it goes live on April 1. It’s not going to make raising money per se easier – but it will loosen the pain of process a little.
For a look at how bad it could all get, take a browse through Box Inc’s SEC Form S-1 Registration Statement for their IPO. It’s 220 pages, and while interesting for some (and to me at least) will be hard going for many investors.
Buddle Findlay published their latestupdate on the FMCA today (it’s worth reading), and I noticed one new provision that might be piquing the interest of a few listed companies:
“From 1 April listed issuers will be able to make rights issues and other similar offers of securities of a class that is already quoted, using a “term sheet” type document”
That may be an angle that Mega is thinking about, but who knows.
And of course Crowd Funding becomes a thing from April 1, though the actual sites are some time away as the FMA has yet to even publish the requirements to be a licensed crowd funding provider, let alone take prospective crowd funders through that process.
But from April 1 any company will be able to raise up to $2 million a year from a combination of personal offers and crowd funding. Offshore experience and the smart word on the street is that successful crowd funding is expected to deliver average investment amounts that are around $100,000-$150,000. There seems to be feeling that crowd funding will be used as a top-up mechanism or a catalyst for personal offers, rather than the sole source of funds. Time will tell.
Financial Markets Conduct Act MBIE official site.
Buddle Findlay’s latest update
An older Buddle Findlay update with lots of other links.