The money moves in an established process with the following steps:
The fundraising company opens a fundraising round, establishing a start date and a close date.
Within each round, the conditions for investment in the fundraising company stay the same: minimum investment and purchase price of each share (including the value of the share and the issue premium).
Occasionally, there may be other conditions, which will be clearly set out to all new investors, for example: investment in pre-established multiples of the minimum investment; differentiated conditions for different types of investors (for example, special conditions for the technologists who develop the project; etc.
The investors who decide to participate by investing in that round, do so by paying in or transferring the quantity they wish to invest into the current account of the fundraising company, indicating:
Name: of the person who will figure as shareholder of the company.
Concept: capitalisable loan.
At the closing date of the round, the fundraising company will automatically start the process for increasing capital with the following steps:
A General Meeting of the fundraising company will be called (only of the existing shareholders, that is, the investors in previous rounds whose investment has already been converted into capital of the company via a previous capital increase formalised before a notary) which must approve the new capital increase.
All the shareholders (only existing shareholders) are requested to waive their participation in the capital increase. For the sake of simplicity, passive waiver may be opted for, although it takes longer.
The waiver is a formality: an existing shareholder may opt to waive his preferential right as a shareholder and, at the same time, invest as a new shareholder in that round.
Arrangement is made for the capital increase to be put on record before a notary.
The capital increase is put on record before a Notary.
The law requires only the presence of the Notary and that of the Director of the company.
Normally, the company’s lawyer also participates.
Possibly, the company may invite its shareholders and new investors to witness the act, but they will not be entitled to sign even as witnesses.
The deed of capital increase is register as a documented transaction in the Companies Registry.
Therefore, the money transferred to the fundraising company is the direct property of the investor until such a time as the capital increase is put on record before a notary. Until such time, the money is yours, as shown on the bank confirmation of its deposit or transfer, you have loaned it to the company for a specific purpose (which is to become capital of the company: capitalisable loan) and the company owes you that amount. In the notarised act of capital increase of the company, that money becomes share capital and is no longer the investor’s money; in exchange, the investor is the owner of the corresponding holdings, as will be recorded in the deed of capital increase that will be granted by the Notary during that act and which will include the name of the investor and the numbered holdings that correspond to him.
The fundraising company will proceed, immediately afterwards, to make a capitalisable loan to the project management company, so that the latter may use this money to pay its expenses and investments and continue with the development of the project.
Upon compliance of the conditions of the Contract signed between them, either of them may request capitalisation of the debt contracted by the project management company with the fundraising company. In the formalisation before a notary of the capital increase of the project management company, that money will become share capital and will no longer be money belonging to the fundraising company; in exchange, the fundraising company will be the owner of the corresponding holdings, as will be recorded in the deed of capital increase granted by the Notary and which will include the name of the fundraising company and the numbered holdings that correspond to it.