Need a Business Investor – Tips to Consider

The classic definition of a business is “an undertaking for the purpose of making a profit.” Enterprises naturally go through several phases, which depending on the context of the discussion will attract several different descriptions. An enterprise may be described as being in the start-up phase, the growth phase, the mature phase or even a phase of decline. A large majority of businesses have an appetite for additional capital.

More capital (if utilized well) should translate into at least one of the following benefits for the business: expansion of the number of units of goods or services that the business is able to offer, lower cost of production, lower cost of financing, availability of working capital, managing risks and threats to the business.

Here are some tips (not an exhaustive list) that you may consider if you need a business investor: 1. Ensure that the investor is a “fit and proper” person. The regulations for some business sectors, such as banks, financial institutions, pension funds and charities, specifically require that directors and officers meet fit and proper criteria. Most business sectors do not have this specific requirement. However, the Proceeds of Crime Act is applicable to all persons in Jamaica. By virtue of this legislation, persons who do business with others who benefit from criminal activities may be exposed to being charged for violations under the Act. Therefore, it is prudent that one ensures that new investors’ source of funding is above board. Additionally, in order for a business to access legal services, financial services, real estate services, accounting services, government contracts and licenses, the usual requirement is that the shareholders and directors of the company are to be disclosed as these service providers are required to “know their clients” and be the gate keepers for ensuring that the proceeds of crime do not enter the formal economy. Having a tainted investor may present some obstacles in accessing these services.

This article is for general information purposes only and does not constitute legal advice.

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