It is not easy to carry out risk financing, and there are many problems that need attention. Below I sorted out the details of starting a business. Welcome to reading.

Problems needing attention in risk financing

(1) Only by doing things according to economic laws can we get the support of bank loans.

(2) Don't set it too high in the initial stage of starting a business. Banks should do what they can before they are willing to lend. Being overjoyed not only harms oneself, but also harms the bank, because it affects the repayment ability.

(3) Determine the production scale with economies of scale.

(4) When applying new scientific and technological achievements, we must adhere to the combination of technological advancement and feasibility with economic rationality and efficiency, and we will certainly get strong support from banks.

(5) Choose the appropriate loan application time.

(6) Arrange and implement its own funds.

Eight legal problems that should be paid attention to in individual venture financing

Mr. Liu is a contractor of a county-run enterprise in Shanxi, which processes a very rare ore and has a very promising prospect of earning foreign exchange through export. However, the production equipment of this enterprise is outdated, the power supply is often interrupted, and the production capacity is seriously insufficient. Seeing that great business opportunities will be missed, Mr. Liu is not reconciled. He came to Beijing to find investors to finance the project.

Mr. Liu's first question is that investors need to read the introduction documents of financing projects such as business plans. Later, investors asked Mr. Liu to provide a lawyer's due diligence report. Faced with these problems, Mr. Liu was at a loss and had to ask a lawyer for help.

At present, there are many people like Mr. Liu looking for funds for personal entrepreneurship, and many entrepreneurs will encounter the above problems. In fact, the investment and financing process contains risks, and the legal issues involved are very complicated. The best way is to seek legal support. With the support of legal experts, financiers can avoid going the wrong way and spending money improperly.

Legal issues The legal issues involved in financing mainly include the following eight aspects:

First, the legal subject status of the financier. Mr. Liu is the contractor of a county-run enterprise. From the legal point of view, his representative role is questionable. According to the law, Mr. Liu, as a contractor of an enterprise, only has the right to contract business, but has no right to deal with major issues such as investment and financing of the enterprise. Since the enterprise is run by the county, it is likely to be a state-owned enterprise. Whether state-owned enterprises need financing is decided by enterprises or shareholders, that is, by local state-owned assets management departments.

In other words, Mr. Liu has no right to reach any investment and financing agreement with investors without the authorization of enterprises or state-owned assets management departments. Even if an agreement is reached, the effectiveness of the agreement needs to be ratified by the enterprise or the state-owned assets management department afterwards to have legal effect.

Second, the legal subject status of investors. The investor Mr. Liu is looking for is the Beijing representative office of a foreign investment company. According to the law, the representative office shall not engage in any business-related business activities. Therefore, the representative office has no right to sign any investment and financing contract with Mr. Liu.

In addition, China laws prohibit foreign investment in the development of certain mineral resources. At the same time, it should be pointed out that these foreign-funded companies or representative offices easily agree to sign so-called joint venture and cooperation agreements without detailed investigation and verification of the qualifications of investment projects and financiers, and ask financiers to pay deposits or other various fees. The financing party should seriously investigate and verify the situation of the financing party to prevent being deceived.

Third, investment and financing projects should conform to the industrial policies of the central government and local governments. Under the current policy environment in China, foreign-funded enterprises and even private enterprises are not allowed to set foot in many investment fields.

Fourth, the choice of financing methods. There are many options for financing, such as debt financing, equity financing, preferred stock financing and lease financing. Various financing methods have great differences in the distribution of rights and obligations between the two parties, which have great influence on enterprise management.

Fifth, the choice of return form and mode. For example, the principal repayment plan, interest calculation and guarantee form in debt financing need to be agreed in the loan contract. If investors invest capital or other assets to obtain the equity of the investment project company, they need to focus on the equity ratio, dividend ratio and time. Relatively speaking, investors are more concerned about the return on investment.

Sixth, the writing of feasibility study report, business plan and investment proposal. The document that Mr. Liu needs to provide is a business plan. The above three documents have different names and similar contents, all of which include the introduction of various aspects of financing projects. The writing requirements of these documents are true and accurate, which is one of the basic basis for investors to judge whether to invest.

At the same time, the writing of documents needs legal basis. For example, the environmental requirements of the project must be stated realistically. Otherwise, if the project's environmental protection measures fail to meet the requirements of national or local laws and regulations, the environmental protection department will order it to prohibit its continued operation, and its losses are incalculable.

Seventh, the possible problems involved in due diligence. The due diligence conducted by lawyers is to fully understand the legal status of financiers and investment and financing projects, and issue due diligence reports to investors according to the understanding.

Eighth, equity arrangement. Equity arrangement is a game in which investors and financiers allocate rights in the soon-to-be-established enterprises after reaching an agreement on the project. Because there is no very effective remedy by law, it is not uncommon for large shareholders to control the company and infringe on the interests of the company and minority shareholders in corporate governance. Careful equity arrangement is something that financiers and investors need to consider carefully.

The above eight aspects are possible legal risks in the process of investment and financing. Of course, there may also be other legal risks, such as whether the funds are in place in strict accordance with the contract and the choice of guarantee form, which may affect the normal progress of the project.

Tip:

A lot of investigation and research work is needed in the process of investment and financing, and the final agreement requires several rounds or even dozens of rounds of negotiations and consultations between financiers and investors. Therefore, for financiers who are in urgent need of funds for individual entrepreneurship, they should have a clear understanding of their own projects and take into account possible risks. When necessary, it is very helpful to hire legal experts to intervene in the project, provide relevant legal advice and even directly handle related affairs, which is very helpful for the smooth progress and ultimate success of the project investment and financing.

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