Coming just one week after the making of the Corporations Amendment (Crowd-sourced Funding) Regulations 2017 on 15 June the Australian Securities and Investments Commission released two consultation papers proposing guidance for public companies and intermediaries (i.e. crowd funding platform operators) to assist them in using the new crowd-sourced funding (CSF) regime commencing on 29 September 2017. The core part of the consultation papers are two draft regulatory guides.
The Techboard Team recently attended an event by the Crowd Funding Institute of Australia (Perth Chapter) Get updated with the new Equity Crowdfunding laws. There was a general consensus amongst the panel that the legislative settings along with new draft Regulatory Guidelines would lead to quite high capital raising costs under the CSF regime and that CSF would not likely be financially viable for capital raises below around $500K.
The draft regulatory guide for companies planning to raise capital provides guidance on what must be contained in the offer document and the approach that must be taken in developing the document. On its face this guide looks to be requiring a quite rigorous approach be taken to the development of the offer document, which may result in bringing the offer document closer towards looking like a prospectus. The result is that the costs of preparing offer documents will not be as low as some would hope.
A quick reading of the draft guide for crowdsourced funding intermediaries reinforces the high level of responsibility placed by the legislation over intermediaries, which, when taken with the guidelines for companies, suggests costs of capital raising using the CSF regime will not be insignificant.
For more information refer to ASIC’s Website.
ASIC is seeking feedback from companies seeking to make CSF offers, intended platform operators, their advisers and other interested stakeholders.
ASIC invites submissions on CP 288 and CP 289, which are due by 3 August 2017.