The introduction of the Corporations Amendment
(Crowd-sourced Funding) Bill 2016 (Bill) on
24 November 2016 will hopefully provide startups and small
businesses with a unique opportunity to raise capital through
crowd-sourced funding (CSF). The Bill's
introduction comes almost 12 months after the original CSF
legislation was revealed, which subsequently lapsed in the Senate
earlier this year.
The Bill is designed to promote innovation in the retail and
fintech sectors by removing regulatory barriers preventing smaller
investors from investing.
The Bill will allow unlisted public companies with less than $25
million in gross assets and consolidated annual revenue to raise up
to $5 million per year from retail investors through CSF platforms.
These companies will be granted temporary relief from some
corporate governance and reporting requirements, for a transition
period of up to five years.
Although companies are granted temporary exemptions, investors
have some protection afforded by the minimum disclosure
requirements outlined in the Bill, and the compliance checks that
are conducted by CSF platforms. In addition, investors will be
subjected to a cap of $10,000 per issue per year and, should they
wish to back out of an investment, the Bill provides a 48-hour
cooling off period.
During the introduction of the Bill, the Government expressed a
desire to offer similar opportunities to private companies in the
future, through the introduction of additional legislation. As for
now, the Bill is yet to be passed by both the House of
Representative and the Senate. However, there is potential for the
law to come into effect by July 2017 if passed by the Senate early
Startup businesses which are considering seeking funding in the
coming year should consider if they may be able to use the option
proposed by the Bill, and investigate which of the CSF platforms is
most likely to suit their needs.
This publication does not deal with every important topic or
change in law and is not intended to be relied upon as a substitute
for legal or other advice that may be relevant to the reader's
specific circumstances. If you have found this publication of
interest and would like to know more or wish to obtain legal advice
relevant to your circumstances please contact one of the named
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