The Corporations Amendment (Crowd-sourced Funding)
Bill was passed by the House of Representatives in February,
but quietly lapsed in the Senate despite a Senate committee giving
their support for the passage of the bill. The bill lapsed at
prorogation on 17th of April, the Senate resumed consideration of
it on 2nd of May, but it then lapsed again on 9th of May at the
dissolution of Parliament.
The future of a regulatory framework facilitating crowd-sourced
equity funding in Australia now lies in the hands of the party that
wins the election in July.
Both of the major parties have articulated a strong desire to
empower innovation in Australia, develop a culture of
entrepreneurship and capitalise Australia's strengths to boost
business activity. Start-ups are seen as integral to
developing future jobs and there is a need for policy that helps
grow these companies. Both parties have expressed interest in
the value of crowd-sourced equity funding as a method of financing
It, therefore, seems likely that we'll see a new CSF bill
brought before Parliament in the early term of the new government.
However, what we see may differ from the lapsed bill due to
the controversy surrounding that proposal.
The intention of the old CSF bill was to make it easier for
small businesses to obtain funding. Whilst it reduced some
disclosure, governance and reporting obligations in an attempt to
reduce costs, many have criticised it for not doing enough to make
this sort of funding accessible. In particular, there was
concern around the requirement that start-ups become unlisted
public companies in order to access crowd-funding. This can
be complex and costly. The Bill required eligible companies
to have less than five million in assets and annual turnover, which
severely restricted access to the framework. Many feel the
government needs to embrace an even lighter regulatory touch to
make the framework more simple, accessible and effective.
Hopefully Australia will see a valuable and successful CSF
framework being introduced in the near future.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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