The Australian government has tabled new legislation relating to the authorisation of Crowd-Sourced Funding for Australian businesses.
The bill amends the Corporations Act 2001 and the Australian Securities and Investments Commission Act 2001 to facilitate Crowd-Sourced Equity Funding in Australia and implements a commitment made by the Australian government to introduce this type of legislation for the benefit of small/medium enterprises.
The legislation allows businesses to obtain capital from a large number of investors through an online platform, where each investor typically contributes a small amount of money in return for an equity stake in the business.
The maximum investment that is available for a retail investor is $10,000 per 12 month period.
The legislation will enable companies to fundraise up to $5 million per annum from the crowd. For a company to be able to utilise this legislation the company will have to meet turnover and asset tests before they are able to fundraise utilising this legislation. The threshold is set at $25 million for turnover and assets.
Public companies will be eligible to use Crowd-Sourced Equity funding.
The legislation also provides that proprietary companies that wish to raise funds from the crowd will be able to convert to a public company and receive exemptions from some of the more costly governments and reporting requirements for up to 5 years.
The exemption from some of the reporting requirements will be available if a company undertakes Crowd Sourced Equity fund raising within 12 months of registering as a public company and the company will be able to gain an exemption for up to 5 years from requirements to:
- hold an annual general meeting
- have annual reports audited if it has raised less than $1 million from Crowd Sourced Equity Funding and provide its annual reports to investors other than by publishing the report on its website.
The legislation has been tabled in the Senate and the Senate has referred the legislation to a committee to review it. The committee is expected to report back to the Senate by mid-February 2017. As soon as the legislation is passed by Parliament ESS BIZTOOLS will produce a Crowd Sourced Equity Funding Package similar to the Early-Stage Innovation Company Package that was produced a few months ago and is now being used by hundreds of accountants around Australia.
If you would like to receive updates on the progress of the Crowd Source Equity Funding bill and overviews of the ESS BIZTOOLS Crowd Sourced Equity Funding Package please send an email to [email protected].
Peter Towers | ESS BIZTOOLS | www.essbiztools.com.au
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