Communicating with business investors
How to legally contact potential investors when trying to raise finance for your business.
Communications with potential investors - eg sending a business plan to them - are classed as financial promotions and regulated under the Financial Services and Markets Act (FSMA).
Under the Act, anyone carrying out a financial promotion must be authorised by the , although most proposals sent to private equity houses seeking funds are exempt from the restrictions.
Under FSMA rules, you are not allowed to include 'misleading statements' in documents, such as a business plan, designed to induce or persuade people to:
- enter into investment agreements
- buy or sell shares in companies
You must be able to prove any statement, promise, or forecast, contained in any communication or document you send to potential investors.
You should consult your legal adviser to ensure compliance with the rules on financial promotions, before approaching potential investors.