Australia: Part IV: Need Funding? Ask the crowd!

The Corporations Amendment (Crowd-sourced Funding) Act 2017('the Act') received royal assent on 28 March 2017 and will take effect on 28 September 2017. The Act has established a regulatory framework for crowd-sourced funding ('CSF'), allowing public companies to raise up to $5 million a year from a large number of individual investors through an online platform.

The diagram below illustrates how the regime will work. Our previous blog Part III: Need Funding? Ask the Crowd! explains some of the basic components of the framework in greater detail.


This framework has recently been developed further through the release of the Corporations Amendment (Crowd-sourced Funding) Regulations 2017 (Cth) ('Regulations') and two consultation papers by ASIC. The consultation papers give guidance to both public companies and intermediaries in using this new CSF regime and understanding and complying with their obligations.


The regulations outline the content and requirements for CSF 'offer documents' and expand on the role and obligations of CSF intermediaries.

Most importantly, under the regulations:

  • only fully-paid ordinary shares will be eligible to CSF;
  • the CSF regime cannot be used where a company making a CSF offer intends to use the funds to provide a loan to any of its related parties;
  • CSF offer documents must include prescribed risk warnings, details of the offering company, details of the offer and information on applicable investor protections;
  • intermediaries must conduct checks on offering company's identity and eligibility to crowd-fund; and
  • CSF offer documents will not constitute the provision of financial product advice.

ASIC's Guidance for Intermediaries

Providing a crowd-funding service will be a new financial service for the purposes of Chapter 7 of the Corporations Act. This means that those wishing to operate as intermediaries under the new CSF regime must obtain an Australian Financial Services Licence that authorises them to provide crowd-funding services. ASIC has released a proposed Regulatory Guide for intermediaries with Consultation Paper 289. In the draft regulatory guide, ASIC has highlighted the following as key aspects of the regime that intermediaries need to be aware of.

AFS Licence Obligations

As an AFS licence holder, CSF intermediaries will have to comply with their general obligations in s912A, and other relevant obligations in the Corporations Act 2001 (Cth). For example, this will include obligations regarding conflicts of interest, adequacy of financial resources, organisational competence and dispute resolution. In relation to the requirement to have adequate financial resources under s912A(1)(d), ASIC is planning to require intermediaries to show cash flow projections that cover at least 12 months ahead and demonstrate that they hold a cash buffer of at least 5% of the projected 12-month cash outflows. In assessing the knowledge and skills of responsible managers, ASIC will be looking for experience such as dealing in securities, funds management, operating a crowd-sourced funding platform, financial market operators or managed discretionary accounts operators.

ASIC expects that an application for authorisation to provide a crowd-funding service will relate to a single platform on a particular website. Therefore, if authorisation is granted by ASIC it will be tailored to that specific platform that it has assessed.

Specific Obligations under the CSF Regime

CSF intermediaries must meet their gatekeeper obligations which involve performing checks on companies seeking to make CSF offers before publishing CSF offer documents on their platform. This includes checking the company's identity, eligibility to make a CSF offer, ensuring the offer document contains the information required and checks on key personnel in the company.

They must also:

  • prominently display certain information on their platform, such as the prescribed general risk warnings and disclosure of platform fees paid to them by the company making the CSF offer;
  • provide a facility on its platform to enable people to make applications in response to CSF offers;
  • provide a communication facility that allows potential investors and companies making offers to communicate with one another about the offer; and
  • deal with application money appropriately and in accordance with the regulations.

Additional Obligations for Retail Clients

There will be additional obligations for intermediaries dealing with retail clients to ensure retail clients can make informed decisions and are not too exposed to excessive levels of risk. These will include ensuring that retail clients complete a risk acknowledgement, rejecting applications that would breach the $10,000 per company per year cap, and that they are informed of their unconditional cooling-off rights.

Data Reporting

ASIC is planning to require all CSF intermediaries to provide it with information about their business each year. This may include information such as the total amount raised by all eligible CSF companies through their platform, successful CSF offers made, unsuccessful offers, investors in CSF offers and the operation of their platform.

What's next?

ASIC will not be receiving applications to operate a CSF platform until the legislation comes into effect at the end of September 2017. They are receiving submissions on both consultation papers and regulatory guides until 3 August 2017. These papers and regulatory guides will serve as ASIC's interim policy until final regulatory guides are issued. The Government has also released draft legislation and explanatory materials which propose to extend the CSF regime to proprietary companies.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Grant Holley
Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions