The SMESX is an Australian & Pacific Region Trading Exchange for Buyers & Sellers of Debt & Equity Securities in SMEs.
Small to medium sized enterprises (SME’s) are an essential part of the economy, it’s where innovation, growth and job creation come from. However, SME’s are facing huge challenges in terms of funding, banks have come under the increasing pressure of *Basel III, lending has tightened, and businesses have seen their traditional source of funding dry up.
Since the 2008 Global Financial Crisis, the implementation of *Basel III, the (Australian) Hayne Royal Commission into the banks and more recently the Global Corona Virus pandemic, the SME financing framework has changed dramatically! Bank lending to SME’s has been shrinking and will reduce further.
*Basel III is a comprehensive set of banking reform measures, developed by the (global) Basel Committee
on Banking Supervision, to strengthen the regulation, supervision and risk management of the banking sector
and was developed in response to deficiencies in financial regulation revealed by the global financial
crisis of 2008.
Even with the current low interest rate environment, the strict prudential requirements of the Banks on business lending (putting your home on the line) makes it almost impossible to borrow on the merits of the business alone.
Equity funding is contributed in return for a share of ownership. It’s not repayable, demands no provision of security (other than the issued shares) and bears no interest.
The SMESX provides a highly effective pathway, system & tool set to assist SMEs get debt free, interest free, unsecured funds to grow their enterprise…even if they are small or very early stage companies. When you appoint an SME Broker, you have access to this unique capital raising process and tool set.
The SMESX is a platform where investors can come and view a range of opportunities offered by companies that are seeking investment and, as the company grows, those early investors that participated can advertise their shares to other investors, all without the barriers to entry that needing a costly prospectus or other form of disclosure document would entail.
Both private Pty Ltd companies and unlisted Public companies are able to raise equity capital. If a private Pty Ltd company obtains more than fifty (50) shareholders, it is obliged (under the law) to change its status from private, to public.
A private company requires a minimum of one director. The directors and officers of a private Pty Ltd company are obliged (under the law) to notify the Australian Securities and Investments Commission (ASIC) of any changes to shareholdings. Whereas, a public company is not required to notify ASIC of changes to its shareholders, it’s the responsibility of the directors and officers of a public company to maintain its own record of shareholders (share register). Also a public company requires a minimum of three directors, with at lease two of them residing in Australia and its accounts must be audited.
At the beginning, does my Company own its own shares? A company never owns any of its own shares. Only its owners/founders and its investors (the shareholders) will own shares in your Company.
Which company should I use as the capital raising entity? This will need some careful consideration. Your SME Broker can give you some guidance here, however no advice or recommendation relating to appropriate corporate structures, reconstructions or business sales or acquisitions should be relied on. These areas may have important ramifications in relation to stamp duty, capital gains tax, income tax, future capital raising and asset protection. For information or guidance on these matters we recommend that you seek advice from an appropriately qualified legal adviser, accountant or professional adviser.
Before you get any new investors! It’s critical that the original owners or founders of the business ensure that they hold the correct quantity of shares before they get any new investors on board, otherwise they could soon find that the new investors hold a majority and therefore could take over.
Strategic growth plan (SGP). It’s important at the outset to determine an appropriate share capital structure for your Company. Your SGP will be dictated by your Company’s growth ambitions. One of the main objectives of your SGP is to ensure that the original owners/founders of the business will hold the controlling number of shares so that they keep holding a majority stake right through the capital raising process.
For start-ups, early stage and established businesses.