An equity funding proposal is a document which entails the proposals for raising money for a company by selling its common stock to financial institutions and investors, who then receive a share in the company ownership. Such a document must be written with conviction so that the proposals enlisted therein are acceded to without any reluctance. It must be clear and logical and all necessary explanations must be given.
Sample Equity Funding Proposal:
Name of company preparing the equity funding proposal: Sunshine Tech Inc.
Date of submission of equity funding proposal: 22nd July 2011
Equity funding proposal created by: Derek Oberoi, Chief Financial Officer
Reasons for resorting to equity funding:
- The company’s stock has respectable value, whereas resorting to debt financing is not a viable option for us.
- We have a strong base of investors who are interested in buying our issued stocks; hence, equity funding is the easier way out for us.
- We are completely aware of the implications of equity funding and have clearly understood the risks associated with fragmented ownership.
- We shall give up only a tiny part of our equity capital in order to tide over this current crisis. We shall have enough left over to raise capital at a later date.
Implication on accepting the proposal:
- The company and investors will mutually agree to a legal settlement, failing which will result in legal steps to be taken from either end.
- The share holder’s will bear equal responsibilities for company’s proceedings during the tenure of their fragmented ownership.
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