Why Not DIY And Raise The Capital Myself?

Yes you can raise capital by yourself using Section 708 of the Corporations Act 2001.

• You will only be able to raise capital of up to $2 million from a maximum of 20 private investors in a 12 months period.
• You cannot advertise the offer. Where any advertisement, editorial or press release leads a person to enter into a course of negotiations calculated to result in the issue or sale of securities (shares), and such conduct is regulated by the Corporations Act 2001, then not only can people who acquire the shares take action, but also any person circulating the material or placing the advertisement may be liable for prosecution.
• If you don’t do it right you will have potential exposure to offences which carry penalties of fines up to $22,000 and prison terms, and ASIC may also wind up the company.

The real implication of these conditions is that in order to raise capital safely and properly you will need to spend a lot of time studying the relevant regulations, preparing compliant documents, and so on. Why re-invent the wheel?

The risks associated with hasty or unprofessional approaches to capital raising can be likened to the risks associated with not being fully compliant with Occupational Health & Safety regulations. Sometimes you will get away with it with no consequences, but if something goes wrong the impact can be catastrophic. In both cases ignorance is no defence in court, the onus is on the employer or the owner to understand the strict compliance requirements.

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