Wednesday, June 19, 2024

Selling shares to friends and family

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Hi Oli – you’re up against some frustrating regulatory hurdles which are designed to make like difficult for entrepreneurs like yourself, but the subject of raising capital in the way you are proposing can be done.

The regulations relating to the promotion of a business with the aim of selling shares to a certain class of investor needs to be looked at in detail.

One method is to offer “mini bonds” rather than a category of shares and it might be useful to look at that option.

If you want to offer shares to existing customers or visitors to your website you can bypass some of the restrictions, but having a list of family and friends is another matter.

I dealt with the issue of how a private limited company can promote itself to prospective equity investors 15 years ago and got tied up in knots with red tape, which is designed to try to “protect” or over-protect the lay investor.

Perhaps the regulatory environment has now made it easier to do what you want.

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