Equity finance can be summarised as funding that is provided by the "owners" of the company. In return for their funding they receive shares in the capital of the company. Equity finance can be sought in a number of scenarios, such as share placements, an initial public offering, rights issues or bonus offerings.

Shares may be subscribed for cash or non-cash consideration, and shares may be partly paid or fully paid. In addition, options over unissued shares and other convertible securities may be issued to investors. Shares may be issued with different rights and in different classes, such as preference shares issued with preferential dividend rights.

Dividends are broadly payments made to members on their shares in return for their equity investment. Since June 2010, dividends no longer have to be paid out of profits but may be paid on satisfaction of a three part test.

See Equity finance.

Debt finance can be summarised as funding provided in the form of borrowings lent by creditors. Debt finance can take the form of loans to the company or in the form of the issue of debentures by the company.

The issue of debentures by the company is subject to specific rules under the Corporations Act 2001 (Cth) including the use of a trust deed and the appointment of a trustee.

It is also common for companies to raise debt finance by the use of quasi-equity or hybrid instruments. For example, some companies may use convertible/converting notes or equity-finance facilities to raise debt finance that is structured like equity finance.

The obligation to repay debt finance may be secured over the company's assets or unsecured. The use of fixed and floating charges by companies is common, but after the expected commencement of the Personal Property Securities Act in October 2011, the reference to charges becomes security interests and there will be a new registration system that companies need to comply with.

The Corporations Act 2001 (Cth) has in place a number of provisions to protect providers of debt finance, such as priority of repayment over members' claims, imposing of personal liabilities on directors for insolvent trading and restricting certain corporate transactions that could adversely affect creditors' rights.

See Debt finance.

One of the key aspects in the process of raising capital by the issue of shares is disclosure to investors. The general rule is that disclosure is required unless one or more exemptions apply. The more commonly used exemptions include the small scale offering and offers to sophisticated investors.

If a disclosure document is required, then an offer for shares must be accompanied by a disclosure document. The most commonly used disclosure document is a prospectus. If a disclosure document is not used, companies commonly provide investors with an information memorandum instead.

Failure to comply with the disclosure requirements may result in the company and its directors being exposed to criminal liability, as well as compensation claims. The availability of the due diligence defence means that companies and their directors ought to implement a formal due diligence and verification process as part of the capital raising process.

The practical process of capital raising broadly involves a consideration of the structure and offer, preparation of the documentation, lodgement with ASIC (if required), making of the offer, holding monies prior to the issue of shares, and the issue of shares.

There are also a number of circumstances in which the issue of shares is restricted, such as if the minimum investment or quotation conditions are not met, the expiry of the disclosure document, imposition of an ASIC stop order, providing financial benefits to related parties and deemed variation of rights.

See Capital raising.