Before approaching an equity crowdfunding platform, confirm the company’s legal structure, funding target and proposed share terms. Review the cap table, articles of association and any existing shareholder agreement. These documents must support the issue of new shares and deal with matters such as voting rights, pre-emption rights, transfers and future fundraising. Existing investors may need to approve the issue or waive contractual rights.
Set out the proposed investment clearly. This includes the share class, price per share, percentage of equity offered, minimum investment and any rights attached to the shares. If the company is seeking SEIS or EIS relief, check eligibility and prepare the required information for advance assurance where appropriate. Tax relief is subject to statutory conditions, and it should not be presented as guaranteed to investors.
The platform and prospective investors normally require information about the business, ownership, finances, intellectual property, employees, material contracts and regulatory position. Assemble corporate records, accounts, management information, key customer and supplier agreements, employment documents, trade mark registrations and details of any disputes or borrowings.
The campaign description and financial forecasts must be accurate, balanced and capable of being supported by evidence. Claims about market size, revenue, customer numbers, product performance or future growth should be checked against underlying records. Financial promotions also fall within the UK regulatory framework, so the campaign materials must follow the applicable rules and the platform’s approval process.
The subscription or investment agreement should match the campaign terms and explain when funds are accepted, when shares are issued and what happens if the target is not reached. Update the company’s statutory records after completion, issue share certificates where required, file the relevant information at Companies House and provide investors with the agreed communications.
Harper James is a UK full-service commercial law firm advising businesses on fundraising and the laws of England and Wales. A legal review can be organised around the campaign timetable, covering the articles of association, shareholder arrangements, investment documents, disclosure material and completion filings.
Equity crowdfunding creates a larger shareholder group than a typical angel round. Decide how investor communications, voting and information rights will operate before launch. A nominee structure, where used by the platform, should be understood alongside the company’s constitutional documents and investor agreement.
The board should also consider the effect of the campaign on future fundraising, employee share schemes and a potential sale of the company. A clean cap table, consistent investor terms and complete records reduce administrative work after the campaign and give future investors a clearer view of the company’s ownership.