Raising Capital for a UK Company

1. 01

   Choose an instrument that fits the round

   Compare timing, certainty, valuation, repayment and control before choosing a familiar document name.

   • Priced equity. An immediate share issue fixes the price and ownership effect at closing. The parties need to agree the class, rights, valuation and number of shares.
   • Advance subscription. An ASA provides money for shares to be issued later under agreed mechanics. Drafting, timing and repayment features can affect legal and tax treatment.
   • Convertible instrument. A convertible note or similar instrument may begin as debt or a contractual investment right and convert on specified events. Interest, maturity, security and repayment consequences need close review.
   • Ordinary loan. Debt may avoid immediate dilution but creates repayment, interest, covenant and insolvency considerations that equity does not.

   A document's label does not determine its legal, accounting or tax treatment. Review the actual terms with the relevant advisers.

   Checks to make

   • Model cash needs, valuation, dilution and repayment under each realistic instrument.
   • Identify the trigger, long stop, interest, conversion and default mechanics where relevant.
   • Confirm the proposed instrument fits the company's constitution, tax plan and future funding strategy.
2. 02

   Set valuation, ownership and investor rights

   Translate the headline investment into a cap table and governance model everyone can understand.

   • Cap table impact. Model issued shares, options, promised equity, convertibles and the proposed round on a consistent fully diluted basis.
   • Share rights. Define voting, dividends, return of capital, conversion, anti-dilution and other class rights in the appropriate documents.
   • Control rights. Reserve investor consent for genuinely important decisions and make sure thresholds, board rights and information rights can operate in practice.
   • Founder position. Review vesting, leaver provisions, service expectations, restrictive covenants and IP ownership alongside the investment.

   Checks to make

   • Reconcile the current legal register, option records and cap table before negotiating dilution.
   • Model voting and economic outcomes before and after the round under realistic scenarios.
   • Record each investor and founder right in the document that can validly create or enforce it.
3. 03

   Check company authority, pre-emption and promotion rules

   Confirm the company can make the offer, communicate it lawfully and issue the securities on the proposed terms.

   • Allotment authority. Check the Companies Act, articles and existing resolutions to identify whether the directors have authority to allot the proposed shares.
   • Pre-emption. Statutory, constitutional and contractual pre-emption rights may require an offer to existing holders or a valid waiver or disapplication process.
   • Financial promotions. Communications inviting or inducing investment may engage the financial promotion restriction unless they are approved by an authorised person or an exemption applies.
   • Private company limits. A private company must stay within the legal restrictions applicable to offers of its securities to the public.

   Checks to make

   • Identify the exact allotment authority and approval route before signing investment documents.
   • Check every statutory and contractual pre-emption right against the proposed issue.
   • Review the investor deck, emails, website and offer process for financial promotion issues.
4. 04

   Close the round and preserve the evidence

   Coordinate documents, money, approvals and company records so the legal ownership agrees with the deal.

   • Conditions and documents. Track due diligence, consents, amended articles, accession documents, investment agreements and any founder or IP actions required before closing.
   • Funds flow. Set subscription amounts, payment details, closing conditions and release mechanics clearly. Do not issue shares against an unclear payment position.
   • Registers and filings. Update the register of members, issue share certificates, maintain the statement of capital and file the return of allotment within the applicable deadline.
   • Tax scheme evidence. If SEIS or EIS is relevant, preserve the eligibility analysis and use of funds evidence. Advance assurance does not replace ongoing compliance with the statutory conditions.

   Checks to make

   • Use one closing checklist for approvals, signatures, funds, certificates, registers and filings.
   • Reconcile the post-money cap table with the signed documents and register of members.
   • Assign owners and dates for SH01, tax scheme, option and investor reporting work after closing.

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