COMPANY STREAM
Documents
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What documents do we need and why?
Equivesto collects several documents from your company as part of our application, due diligence, and onboarding process. These documents help us verify your identity and that of your company. They help us complete detailed background checks on you, your company, and your directors, officers, and co-founders. The documents also allow us to fully understand your business and goals, and their fit for equity crowdfunding.
Equivesto completes detailed due diligence on all companies that apply to list on our platform. We spend time understanding and verifying all the complex details of your company so we can help you plan your crowdfunding round more effectively, and also to provide comfort to investors that all information provided as part of your campaign is accurate. Both you (on behalf of your company) and Equivesto are required by law to sign forms confirming the veracity of all information provided in the campaign, and any changes to information must be disclosed promptly to investors.
Certificate of Incorporation: Why do we need it?
Your certificate of incorporation details key information, including that you are incorporated, your Corporation number, your company’s legal name, the date of your corporation, the directors at time of incorporation, and the jurisdiction of incorporation. As part of the steps of verifying your company’s identity, Equivesto uses this document and information to compare to government records to confirm that they match.
Capitalization Table: Why do we need it?
Your capitalization table contains information about the total number shareholders (owners of stock/equity) in your company, their names, the number and class of shares they hold, and the amounts they invested to acquire those shares.
We use information from the capitalization table to advise you on company valuation, implications of different raise amounts, share classes, and how to keep your capital structure clean for the future (this makes it easier to raise capital during future rounds).
We use the information from your capitalization table to help you prepare a new cap table after your equity crowdfunding round with all of the new shareholders. After a round, you will have hundreds, or perhaps thousands, of new shareholders; keeping your cap table organized and precise will be important. We talk to you about recommended software support for this, including online, digital cap table software that is free.
Organizational Chart: Why do we need it?
It is important for Equivesto to understand whether your company is owned by or owns any other companies. When raising capital, it is often important to investors that they invest in the parent (owning) company. If they invest in a subsidiary company, there is a risk that the funds they invest will be used to generate profits for the parent company from which they do not benefit. Except for very unique circumstances, Equivesto requires you issue equity in your parent company. The issuing company also has to be incorporated in Canada.
Under Federal anti-money laundering and sanctions legislation, Equivesto is required to verify the identity of all shareholders with over 25% ownership stake in a company, and confirm that they are not subject to federally-imposed economic sanctions. We also ensure that they have no criminal history or undischarged bankruptcy.
Business Plan: Why do we need it?
Your business plan is a long, detailed document that outlines all your ideas related to your business. It includes sections on the problem you are solving, your solution, your target market, your competitors, the risks you face, and much more. As a founder of your business, you have thought about all these important details when planning and launching your business. However, investors cannot see all the detailed thought and planning that has gone into your business unless we show them. A detailed business plan is an effective way to compile a holistic view of your company, your goals, and the depth of your planning.
When applying to raise with Equivesto, we take the time to fully review your business plan. Understanding the full scope of your business is an important part of our due diligence. It can also help Equivesto provide advice and feedback to help you strengthen your business approach prior to launching your campaign or better explain it so as to better attract investors.
Pitch Deck: Why do we need it?
A pitch deck is an effective document to explain your business and the problem it solves in as little as 10 slides. This deck enables potential investors to understand your business proposition with a quick glance that can entice them to spend more time reviewing your company’s campaign.
Financial Statements: Why do we need them?
Financial Statements are optional when raising capital via equity crowdfunding.
Financial statements can be provided as part of a campaign to help prove to investors your company’s success so far. They can also assist us during our Due Diligence of your business. Financial statements can be internally prepared by you, or externally prepared by an accountant.
There are 3 levels of accountant-prepared financial statements. The three levels denote different levels of review that an accountant has done on your financials.
Notice to Reader: Notice to Reader (NTR) Financial Statements are the simplest and cheapest financial statements that can be prepared by an accountant. With NTR statements, an accountant compiles your financial statements and ensures that they have been completed in a financially and mathematically correct way, but does not guarantee that the statements or accounting methods used are a correct fit for your business. For a small business, NTR statements can often cost several hundred to a few thousand dollars.
Review Engagement: Review Engagement statements are more detailed and comprehensive than NTR statements, but do not provide the full, end-to-end review of Audited financial statements. They provide investors more confidence that just Notice to Reader statements.
Audited: Audited financial statements are the most comprehensive option. With audited financial statements, the accountants go through all your financial records for the entire year to ensure that all numbers written in the statements are accurate. This includes verifying details like bank balances and customer statements. The accountants themselves sign off on the audited financial statements, and provide a detailed ‘Opinion’, which confirms that your records have been tested under recognized auditing standards and your financial statements prepared using recognized accounting standards. Audited financial statements can take several weeks or months to prepare and can cost upwards of several thousand dollars.
Shareholder’s Agreement: Why do we need it?
Your shareholder’s agreement is a critical document when raising capital through issuing shares. It describes the rights and obligations of all shareholders, the power structure of your company (outlined through the Board of Directors and voting rules), share classes, and other important information such as the shareholders’ right to access to ongoing financial and other operational information. Understanding how your company is controlled, and their rights as shareholders, is important for those considering investing. With equity crowdfunding, this is even more critical. It is important that your shareholders agreement is adequately adjusted to easily facilitate equity crowdfunding and the addition of several hundred, if not thousand, shareholders. It is critical that the document is fully understood by yourself and your executive team, and fully reviewed and approved by your company’s lawyers.
Equivesto reviews your shareholders agreement in detail to understand the implications for any investors participating in your campaign. We provide detailed feedback and advice to you regarding share classes, voting rights, Board provisions, and many other clauses in your agreement that can be impacted by equity crowdfunding.
Take the time to review and understand your shareholders agreement. It is a legally binding document and can help protect you, your Board and your current and new investors.
Equivesto provides a free shareholder’s agreement template, and a free joinder agreement template. The Joinder agreement is an added piece of a shareholder’s agreement that goes at the end. This piece allows many other shareholders to join simply by signing the joinder agreement, without the entire shareholders agreement needing to be resigned by all investors. This makes it much easier to add several new shareholders as part of an equity crowdfunding round. Equivesto requires you to have a joinder agreement in your shareholder’s agreement to use our platform.
Please note, while we provide a template of the joinder agreement and shareholders agreement to assist you (and try to minimize your legal expenses), Equivesto is not your lawyer. You must still have your own lawyer review all legal documents before submitting them to Equivesto.
Financial Projections (5 year Annuals): Why do we need them?
Investors participate in a capital raise in the hope that their investments will grow over time, either through dividends (payouts to shareholders) or through capital gains (the value of their shares increasing). Detailed financial projections give them a window into your hopes and plans for the future. The more detailed you are (and if you have ‘likely case’ and ‘worst case’ scenario versions), the better they can understand the depth of your research, thought, and focus. The numbers in your financial projections, while just goals based on assumptions, can help investors understand the direction you plan to take the company, the risks that might prevent you reaching your goals, and the returns they might earn if you succeed. The more time put in, detail included, and believable your assumptions, the more faith your investors will put into your projections.
Financial projections also play a role in helping to confirm your valuation. Equivesto provides comprehensive advice and feedback on your valuation as part of your campaign. Your valuation determines the price of the shares being offered, as well as the number of new shares the company must offer to raise the funds you need and thus the percentage of the company being offered to investors). Equivesto uses many factors to review your valuation, including your financial projections. We cannot overstate the importance of these projections in your raise.
Purpose and Amount of Raise: Why do we need them?
It is important that Equivesto understand how much money you hope to raise, as well as the proposed use of those funds. This information needs to be clearly communicated to potential investors as part of the campaign, and Equivesto uses this information to help determine whether equity crowdfunding is a good fit for your company. We can give you advice and feedback around your raise amount and the potential impact of raising funds for different purposes.
Corporate Resolution: Why do we need this?
Companies are legal entities, and as such, must make clearly recorded decisions when making changes to their legal structure. Your shareholder’s agreement sets the framework for the control of your company, and shareholder’s agreements often place a Board of Directors in a position to make decisions for the company, via vote. Your Board must approve the decisions to raise capital, approve Equivesto Canada Inc. as your agent, give us permission to offer shares on your behalf, and allow you as your company’s representative to speak with us on its behalf.. The corporate resolution template we provide is a simple template that includes all necessary language allowing those decisions. Before being able to conduct due diligence on your company, plan your equity crowdfunding round, and work with you, your company must give us formal permission to do so.
Please note, while we have provided a template of this document to assist you (and try to minimize your legal expenses), Equivesto is not your lawyer. You must still have your own lawyer review all legal documents before submitting them to Equivesto.
What document templates do we provide?
Equivesto provides several different variants of free templates that you can use to prepare for your application to Equivesto. Our goal is to help lessen the barriers for companies to effectively raise capital from their communities. By providing templates you can completed for yourself, we hope to help you minimize costs (legal, accounting, marketing, etc.) related to raising capital. Please note however, that the final documents provided must still be reviewed by your own lawyer prior to submitting to Equivesto. We are not your lawyer. View All Templates
Corporate Resolution
Shareholders Agreement (including Joinder Agreement)
Business Plan
Pitch Deck
Financial Projections
What documents are completed as part of raising on Equivesto?
Crowdfunding Offering Document OR Offering Memorandum
If you would like to raise from investors living in Quebec, you will need to have this document translated into French.
Updated Capitalization Table (compiled by Equivesto)
Pitch Video
What information do Companies need to provide about their Co-founders, Officers, Executives, and Major Shareholders?
Name
Current Address
Residential History
Citizenship
Date of Birth
Contact information
(Optional) Social Insurance Number
(Optional) Passport Number
Marital Status
Employment History
Any information that you might provide as part of your Equity Crowdfunding campaign must be verified. This includes details about any past employment of key personnel and Board members that might help encourage investors to support your company. For Example, investors may feel more comfortable investing in a new tech company if one of the founders is an ex-Google employee. In that scenario, Equivesto needs to verify that employment information to ensure all information disclosed in the campaign is accurate.
Education
This includes details about any education, training, diplomas, or certificates that you, key personnel or Board members have that might help encourage investors to support your company. For Example, investors may feel more comfortable investing in a new finance company if one co-founder completed a business degree at Harvard University and another Chartered Financial Analyst. In this scenario, Equivesto needs to verify both the degree and certificate information to ensure all information disclosed in the campaign accurate.
Documents Prepared While Working With Equivesto
There are several other legal documents that will need to be prepared as part of an equity crowdfunding campaign: some documents prior to the campaign launch, and several documents afterwards. Equivesto will work closely with you to prepare all of these documents, but you will need to have your own lawyer on hand to review them and provide you with legal advice. There will be several back and forth discussions about these documents, so ensure that you lawyer is well informed about your upcoming equity crowdfunding round, and both you and your lawyer have enough time set aside to review and discuss all of these documents.
Documents Prepared prior to the Campaign Launch:
Amendment to the Article of Incorporation
Creates the new share class for the equity crowdfunding investors
Corporate Resolution
This allows Equivesto Canada Inc. to work with you and help raise capital
Crowdfunding Offering Document OR Startup Crowdfunding Document
Legal document outlining your offering of shares via equity crowdfunding
This is filed with the regulators after the campaign ends
After the Campaign finishes:
Corporate Resolution issuing shares to new investors
Amendment to the articles of Incorporation issuing the new shares
Official document for the Securities Regulators letting them know that you raised money from investors
This is filed with regulators after the campaign ends
Equivesto can help you prepare these, but they will still require independent review from your own lawyer.