All companies who raise capital via equity crowdfunding on OnMarket's intermediary platform are required to appoint a share registry. Cassandra Diamantis, Marketing Manager, sat down with Matt Mills from Boulevard to deep dive into the purpose and benefits of a share registry.
Thanks for taking the time to meet with OnMarket, Matt. To kick off this Q&A, can you explain what a share registry is in Australia?
A share registry is a service that records and keeps a note of who owns equity in a company. This means that there's an independent source of truth when it comes to the ownership, requirements, and the obligations a company's directors have to those who've invested funds. So, in Australia, in particular, it serves a very important requirement under the Corporations Act. Every company has a register that is commonly in the form of a spreadsheet noting who bought what. However, a share registry is a layer above that, which is a third party company or platform that takes the ‘spreadsheet’ off the company's hands and manages that for the company. With the company's input, they provide greater accountability, greater transparency, and deliver a higher sense of trust, as opposed to just relying on the company itself.
That leads me to my next question is a share registry compulsory? If not, what are the benefits of having one?
It’s not compulsory and it’s something that you don't need to have as a company director. The only thing you need to have is a register, meaning, you know exactly who's invested what in a company, however, a share registry delivers a greater level of professionalism and protects both the company and the shareholders. Often investors like the fact that a company is using a share registry platform or working with a share registry company because it gives them confidence that not only is the company taking their obligation seriously (when it comes to management and recording) but also ensures all investments are recognised. It also means the investor has a way of obtaining information without having to rely on the company. For the company, the benefits are around streamlined administration, and risk mitigation as the responsibility does not solely land on their shoulders - they have someone else helping them. Most importantly, it delivers a layer of, again, accountability and transparency to the investors. For the investors, the key benefits of using a registry provider very much land in terms of knowing that everything's being recorded properly and having confidence that if they need the supporting documentation, they're able to get it. It’s not just the company saying to the investor ‘trust us, we've got this’, but they have someone double checking all critical information and making sure things are happening above the board.
How do you, as a share registry, help the company maintain organisation?
There’s three main ways Boulevard assists companies with organisation. The first is, in any company you have three critical documents that need to line up. The first is the balance sheet. So, the balance sheet from an accounting perspective reports how much cash has come in from the investors and therefore supports the amount of cash held in the company because of investment, as opposed to say selling products or some other activity.
Therefore, this lies in the equity part of the balance. That then must line up with the register, which is of course, from a corporate perspective, is the source of truth in terms of who the investors are… their details, their details of investment, when they invested, how much they invested, any rights and responsibilities for the company to that investor, and this gets recorded in the share.
Then finally, every company in Australia has a reporting obligation to ASIC. They must inform ASIC when they receive investment and outline their capital structure (that is how many shares they have on issue, how much capital they've received from investment has increased). In the case of private companies who the top 20 shareholders are and where the register comes in very simple sense.
A share registry takes care of ensuring all those three key pieces of information are always aligned. Also, the share register bridges the investors and the company together. Neither party must rely independently on one another.
In relation to an equity crowd funding offer, once that offer is closed, what's the following high-level process?
An equity crowd funding offer has a lot of steps and where the register plays a big part is at the very end of it. After a campaign is closed successfully, you’ll have the actual size of the investment, and then you'll have the settlement of those funds. What the share registry does here is two key actions. The first is recognizing and signing off on the settlement reports. This confirms that those who've invested in the company have been issued shares and that all those other pieces of documentation have been registered to ASIC and appropriately updated.
The second key role is to provide a place for those new shareholders to be housed and access that the supporting documentation. Documentation refers to the share certificates, which prove and provide evidence of their investment as issued by the company, and the holding statement, which is a proof of position. This gets updated at the end of every financial year as well.
Then, in terms of the intermediary (the platform raising the funds), the share registry allows them to hand off that responsibility once the campaign closes.
You've talked a little bit about access, transparency, and investors receiving their shareholder certificate. For those that are unfamiliar with Boulevard, can you please walk through how they receive these benefits?
Absolutely. When a company engages Boulevard and utilize us to provide these registry services, we typically go through a process of working with the company to sync all the key pieces of information. That way the company is not only compliant with the obligations of the Corporations Act, but all existing investors and new investors are accounted for. When new investors come in, Boulevard will handle the whole process of ensuring that their shares are issued. And again, more importantly, that they get access to the platform to view their holding and view their certificates. So that typically comes in a form of email invitation.
They'll receive an email invitation so they can create an account on Boulevard and then log in to see their holdings on the system. They'll also be able to view past and present company announcements on the platform. Therefore, they're always able to know the latest company insight. They'll also be able to download their documents and company documents.
Say that this investor has invested in multiple companies, and they all use Boulevard as their share registry. Will they have all their certificates in the one profile?
Precisely. They’ll be able to use the same account and access all the companies in which they're a shareholder in who all happen to use Boulevard as their registry provider.
You talked about how you helping with transparency, how do you facilitate communication between the shareholders and the issuing company? Do you do this, or do you make it a streamlined platform for them to talk to one another?
We act as an interface between the shareholders and the company, typically for two reasons. Number one, because we're experienced and understand what most shareholder queries are, and normally we can answer their questions with the information available as provided by the company. Typically, from a company perspective, the shareholders receive outbound communications via the platform. This ensures that communicating from the company to shareholders is straightforward. But more importantly, there's a record of those communications in one place, which is on Boulevard.
Secondly, for the shareholders, they can easily get in touch with our team at Boulevard. If it's a question relating to their current holdings, their positions, or anything to do with their documentation, we can answer that on behalf of the company, thereby saving the time and effort the company would otherwise have to take to have to handle those questions directly.
Should there be a situation where there's a query that is not answerable by Boulevard, say something specific to the company such as a detail around an upcoming meeting or something to do with the financials the company has released, we will then refer that question to the appropriate contact in the company. Again, the key benefit is that we act as not just a representative for the company to the shareholders, but we also help the shareholders as a representative to the company as well.
That’s important because normally the companies we work with are very fast growing, meaning their management is often quite small and busy. So, we act as a guide in terms of ensuring that everyone's needs are met.
Talking about fast growing companies, Boulevard is relatively new. Can you tell us about what differentiates you between other share registries and why Boulevard was created?
Boulevard only was launched about a year ago because we saw two specific but pressing needs when it came to the registry market. The first was that most registries tend to focus on providing additional services. They’re very professional services oriented, which means there's no clear cost when it comes to their usage for companies. Secondly, most of these registry platforms are more oriented towards large, listed companies. Those who would have gone on to list on the ASX. So, they're not typically used to dealing with smaller companies, let alone those who invest in those smaller companies themselves.
From our perspective, investors need three things. They need confidence, transparency, and accountability. We aimed to build a very focused platform that took all the cost out and therefore streamlined a lot of the processes through automation so that the companies have a very clear, fixed price offering that can meet the same needs as those larger solutions, whilst the same time covering aspects around ASIC and compliance in an automated fashion too. We're the only platform with a fully integrated solution as a corporate registry. We are very clear in regards to what we do and don't provide, for example, Boulevard does not provide legal or accounting advice. We work with the company, accountants, and lawyers to which again is a very big point of difference simply because most other platforms prefer to offer their own solutions. We believe that one size certainly doesn't fit all. Therefore, our focus and our key philosophy is that we want to be the best unlisted company register on the market.
And how have you seen the market appetite for Boulevard?
We think it's quite strong. We know that a lot of companies aren't looking for a one size fits all solution, particularly in the current economic environment. They're looking for something that's cost effective that does the job that meets the needs of all the stakeholders and not much more.
Our viewpoint is very much along the lines of, we want to make sure everyone's needs and obligations are met, but we don't want to up-charge them, upsell them or, or over service them. We’re very much geared towards the category of companies who have raised capital, who have shareholders who need transparency, but who do not want to worry about meeting their obligations about spending a significant sum of money.
To learn more about Boulevard, click here.
To visit OnMarket's current equity crowdfunding offers, click here.