The Australian Securities and Investments Commission (ASIC) has published Consultation Paper 289 Crowd-sourced funding: Guide for intermediaries. CP 289 includes a draft Regulatory Guide outlining ASIC's proposed guidance for crowd-sourced funding platform operators (CSF intermediaries) who can apply to ASIC for a licence from 29 September 2017, including an explanation of the new Corporations Amendment (Crowd-sourced Funding) Regulations 2017.
The Regulations, among other things, provide that:
- people buying CSF securities must acknowledge that they have read the offer document and understand the risks.
- CSF intermediaries must conduct certain checks on the offering company, including that the company is eligible to make a CSF offer.
- there is a required risk warning that CSF intermediaries must display on their offer platform.
The Regulatory Guide explains, among other things, that:
- ASIC proposes to issue CSF intermediaries with an updated Australian Financial Services Licence (AFSL) authorisation to operate a single CSF platform. Intermediaries may be able to operate multiple platforms after sufficiently demonstrating their ability to operate a single platform in a compliant manner.
- the standard requirements for AFSL holders will be updated specifically for CSF intermediaries, including by requiring CSF intermediaries have:
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- a cash flow projection for at least the next 12 months;
- a cash buffer of at least 5% of the cash flow of next 12 months;
- at least $50,000 be held in surplus liquid funds; and
- an auditor annually report on compliance with their financial requirements.
- CSF intermediaries will have to:
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- pro-actively ensure compliance with the cap of $10,000 per investor per company per 12 month period.
- operate a 'communication facility' allowing retail investors to make posts relating to the offer and ask the company making the offer or the CSF intermediary questions. CSF intermediaries will need a further AFSL authorisation if they wish to provide financial product advice on their communication facility.
ASIC invites feedback on CP 289 by 3 August 2017.
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