HISTORIC PRESS RELEASE : Reform of Financial Regulation for Small firms Looking for Informal Capital Investment [December 2004]
The press release issued by HM Treasury on 2 December 2004.
The Government today announced the outcome of its review of the regulations facing small firms and their ‘business angel’ investors. This formed part of the two year review of the Financial Services and Markets Act 2000 (FSMA).
The key changes are:
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Introducing self-certification for high net worth and sophisticated investors, making it much easier for these groups to exempt themselves from the financial promotion rules. This will make it easier for small firms to approach wealthy or experienced investors.
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Making it easier for small firms to promote to potential investors by allowing them to promote to anyone they ‘reasonably believe’ to be self-certified high net worth or sophisticated.
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Ensuring consumer protection by ensuring that unapproved financial promotions come with a prominent health warning, and by including clear warnings, tested with consumers, on the self-certification statements.
The Government believes today’s changes will mean that many companies facing difficulties in obtaining funding will find it easier to approach and attract investors. Addressing barriers to finance is a key part of delivering the Government’s agenda to build a more enterprising Britain. The changes are in response to a consultation paper on informal capital raising and the financial promotions regime published earlier in the year.
Announcing the outcome of this part of the two-year review, Stephen Timms said:
“Today’s changes should improve access to finance for small and high growth firms who are looking for equity investment from business angels. It is an excellent example of Government responding to concerns that legislation isn’t doing its job. Now business angels should find it easier to become certificated, and small firms should find it easier to reach a pool of certificated investors. Both groups will face less burdensome regulation.”
