The UK government has introduced measures designed to enable more companies to raise equity finance without the burden of issuing a prospectus.
A prospectus is essentially a formal marketing document containing details of a proposed investment opportunity which is designed to allow investors to make an informed decision before parting with their hard earned cash. Such a document is legally required before shares in a company can be offered to the public, unless one or more exemptions apply.
With effect from 31 July 2011, the scope of two exemptions has been extended as follows:
- the number of persons to whom an offer of shares (or other “transferable securities”) may be made before a prospectus is required has been increased from 100 to 150; and
- the aggregate size of the offer that may be made before a prospectus is required has been increased from €2.5m to €5m.
The above changes, which derive from an EU directive, have been implemented in the UK 12 months ahead of schedule.
Although any measures designed to help companies raise money have to be welcomed, many small businesses will no doubt feel that far more still has to be done in order to improve access to both equity and loan finance.
Nevertheless, it is important that businesses are mindful of the possibility of raising equity finance as an alternative to collaring their relationship managers at the bank.
As a corporate member of LINC Scotland (the national association for business angels in Scotland) and having advised numerous early-stage companies on funding rounds with an aggregate investment value of circa £5m over the past 2.5 years, no-one is better placed in the region to assist in this niche area.
These Regulations, which came into force on 7 March 2011, make provision about tenancy deposit schemes for the purposes of Sections 120-122 of the Housing (Scotland) Act 2006.
The main objectives of the Regulations are:-
- To tackle the problem of unfairly withheld deposits;
- To ensure that deposits are safeguarded throughout the duration of the tenancy; and
- To ensure that deposits are returned quickly and fairly, particularly where there is a dispute over the return of the deposit, or a proportion of it, to tenant or landlord.
Such schemes require to be approved by the Scottish Ministers and will safeguard tenancy deposits. The Regulations set conditions which schemes must meet before they will be approved and establish the regulatory framework for the schemes.
The Regulations impose duties on landlords to pay a tenancy deposit to an approved scheme, to provide information to the tenant, and to ensure that a deposit is held by an approved scheme throughout a tenancy. The scheme administrator must be a fit and proper person and the Scottish Ministers are allowed to give financial assistance in connection with an approved scheme if they wish to do so. There are sanctions for any failures to comply with the duties imposed.
The establishment of a scheme to safeguard tenancy deposits supports the wider policy objective of raising standards of property management in the private rented sector. It compliments other policies such as national landlord registration, voluntary landlord accreditation and the Repairing Standard, which also aim to raise standards in the sector. To add to this, the Property Factors (Scotland) Bill has now also been approved by the Scottish Parliament and will be implemented by October 2012 or earlier.
On 30 March 2011 the Ministry of Justice announced that the Bribery Act will come into force on 1 July 2011. Implementation had been delayed to allow for the drawing up of guidance on ‘adequate procedures’: this guidance has now been published. The business community has been given three months to digest the new information and ensure that procedures are up to scratch before 1 July.
The guidance outlines the principles underlying the Act and details the offences which have been created. It also provides information on what measures businesses can take to ensure that they effectively guard against the dangers of corruption. Those with ‘adequate procedures’ in place will also have a defence to the offence of ‘failing to prevent bribery’, so the guidance is essential reading. There is also a separate ‘quick start’ guide which is designed to be a more concise introduction to the new laws for those in small businesses.
In his foreword to the guidance, the Justice Secretary Ken Clarke explains that combating the risks of bribery is “largely about common sense, not burdensome procedures”. The business community will learn whether or not the Act upholds this approach in the months to come.
Head of Corporate & Commercial