Back in March we reported that the Australian Senate had passed Crowd Funding Legislation. That legislation which will come into force on 29 September 2017 was criticised for not enabling private companies to use the new regime. However at that time The Treasurer, Scott Morrison stated that work was already underway to enable Pty Ltd companies to equity crowdfund. Well Yesterday it was announced that Equity Crowd funding (or Crowd-sourced Equity Funding) would be extended to proprietary companies and that the Australian Securities and Investments Commission would be funded to the tune of $4.5M over 5 years to “implement and monitor” the changes.
Extracted from the Federal Budget Papers 2017-2018 Factsheet “Backing innovation and FinTech”
Extending crowd-sourced equity funding
The Government is making it easier for start-ups and innovative small businesses to raise capital.
The Government released draft legislation to extend crowd-sourced equity funding (CSEF) to proprietary companies with the 2017‑18 Budget. This will open up CSEF for a wider range of businesses and provide additional sources of capital.
Proprietary companies using CSEF will be able to have an unlimited number of CSEF shareholders.
Shareholders will be protected by the higher governance and reporting obligations that CSEF proprietary companies must meet. These obligations include: a minimum of two directors; financial reporting in accordance with accounting standards; audit requirements; restrictions on related party transactions; and minimum shareholder rights to participate in exit events.”
The Draft legislation is available on Treasury’s website and comments are open until Tuesday, 6 June 2017. We have yet to review the legislation but will provide an update in the coming weeks. Sign up to Techboard to stay up to date with the latest Crowdfunding developments.