Section 8 — Corporations Act 2001: Funding the company’s operations

The shareholders may fund the company’s operations by lending money to the company or by taking up other shares in the company. Except if it is raising funds from its own employees or shareholders or under a CSF offer, a proprietary company must not engage in any fundraising activity that would require disclosure to investors under Chapter 6D (for example, advertising in a newspaper inviting people to invest in the company). The company may also borrow money from banks and other financial organisations. Anyone who has lent money, or provided credit, to the company may ask for a security interest in the company’s assets to secure the performance by the company of its obligations. [sections 113, 124]