What was broken
A fast-growing D2C food brand had secured verbal commitments from a group of angel investors but had never run a priced round. The founders lacked the transaction documentation, a defensible cap table, and the compliance readiness that angels expect during diligence — and were at risk of losing momentum with interested investors.
What we did
CapEasy prepared the company for the round end to end: cleaning up the cap table, organising statutory records, and coordinating the term sheet, shareholders’ agreement, and share subscription documentation with the investors’ counsel. We managed the valuation paperwork, board and shareholder approvals, and the allotment and regulatory filings on close.
Where it landed
The company closed its first angel round on schedule with complete, investor-grade documentation. The founders came away with a clean cap table and a repeatable process for future rounds.
Pick the instrument before you talk numbers
Australia has no SAFE-style standard instrument the way the US does. A first angel round here is almost always structured one of two ways: a priced equity round — ordinary or preference shares issued at an agreed valuation, documented in a share subscription agreement and a shareholders agreement — or a convertible note, debt that converts to shares on a future triggering event (typically the next priced round) at a defined discount or valuation cap. Which one a founder chooses changes what the books carry between signing and conversion: a convertible note sits as a liability from the day funds land, not income, and it stays there — reconciled against its terms — until it actually converts or is repaid. A priced round, by contrast, is settled the moment shares are allotted: cash in, shares out, no balance-sheet liability to track afterward.
The same reconstruction discipline this engagement applied — resolve every instrument against what was actually signed, not what founders remember agreeing to — is what stops a convertible note here from being miscoded as a grant or a loan on the ledger. The note terms (cap, discount, maturity, conversion trigger) have to be carried on a schedule the way a SAFE is carried in the US, because the day it converts is the day the share register and the ledger both have to move together.
The members register moves before ASIC does
Once the round closes and shares are allotted, two things have to happen and one comes before the other. First, the company’s own register of members is updated — proprietary companies are required to maintain this register, and it has to reflect the new shareholding the moment shares are issued, not whenever someone gets around to it. Second, ASIC has to be told: under s254X of the Corporations Act 2001, a company must notify ASIC of a share issue within 28 days, lodged as a change to company details through ASIC’s officeholder portal, giving the issue date, number of shares, class, and amount paid per share. Miss the 28-day window and late fees apply on top of the paperwork you still owe.
This is the exact failure mode this engagement was hired to fix — a company with verbal commitments and records that did not agree with each other, needing the statutory registers corrected before the round could close cleanly. In Australia the fix is the same shape: reconcile every share issued against its allotment resolution and subscription agreement, update the members register first, then lodge the notification inside the 28-day clock so ASIC’s public record matches what the company actually holds internally.
Who your angels are changes what you can legally offer them
A first angel round in Australia almost always relies on an exemption from a full prospectus, and the exemption a founder uses depends on who the investor is. The sophisticated investor test lets a company offer shares without disclosure documents to an investor who meets net assets or gross income thresholds, certified by a qualified accountant — a certificate the company has to hold on file, not just take the investor’s word for. Get that classification wrong and the offer document requirements that were skipped become a live problem months later, not a formality nobody checks.
Separately, if some of the capital comes from an eligible early-stage investor and the company can self-assess as an Early Stage Innovation Company, the investors themselves may be entitled to a non-refundable tax offset on the amount invested — currently 20% of the qualifying investment, capped at $200,000 per investor (and their affiliates) per income year — plus modified capital gains treatment on shares held between 12 months and 10 years. That status is assessed by the company against innovation and expenditure tests at the time shares are issued; it is not something CapEasy or any bookkeeping partner determines, but it is exactly the kind of detail that belongs in the round paperwork the incoming investors will ask for, alongside the subscription agreement and the cap table.
What to take from it
- A convertible note is a liability from signature to conversion — code it on a maintained schedule, never as income or a grant.
- The members register updates the moment shares are allotted; the ASIC lodgement has a hard 28-day clock behind it, with late fees if you miss it.
- A sophisticated-investor offer needs an accountant’s certificate on file before the exemption is safe to rely on — not just an investor’s say-so.
- ESIC status and the early-stage investor tax offset are the company’s own self-assessment against ATO’s tests, not a bookkeeping judgement call — but the round documents should say plainly whether the company is relying on it.
- Rebuild the cap table from the incorporation date forward against every signed instrument; a patched register fails the same diligence questions a second time.