Home Member Resources News LEGISLATION EXTENDS CROWD FUNDING TO PROPRIETARY COMPANIES
Member Resources

LEGISLATION EXTENDS CROWD FUNDING TO PROPRIETARY COMPANIES

Monday, 13 November 2017

The Government has introduced legislation in federal Parliament to extend crowd-sourced equity funding to proprietary companies.

Treasurer Scott Morrison said that extending the crowdfunding framework built on the Government’s support for the start-up and FinTech sector including the enhancements to the ASIC “regulatory sandbox” and tax incentives for investors in innovative start-ups.

“The Government understands that different forms of finance are particularly important for innovative, early-stage businesses that may have difficulty accessing funding from traditional sources,” the Treasurer said.

“As part of this Bill, proprietary companies wanting to access equity crowdfunding will no longer have to convert to a public company entity. Instead, founders will be able to crowdfund while retaining the greater flexibility of the proprietary model.

“The extension will also increase the ability of retail investors to access early-stage investment opportunities. However, these companies will be required to comply with additional obligations to protect investors, including: a minimum of two directors; financial reporting in accordance with accounting standards; audited financial statements once the company raises more than $3 million from crowdfunding offers; and restrictions on related party transactions.

“This extension to proprietary companies builds on the framework for public companies which will commence 29 September 2017.

“Many features of the public company framework, such as the obligations of intermediaries, investor and company caps and the process for making crowdfunding offers, will be the same for proprietary companies.”

The Australian Securities and Investments Commission has also released information on licensing arrangements for prospective platforms.

 

Further information

Treasurer's media release: Turnbull Government opening up new capital markets for small businesses and start-ups

Parliament of Australia: Corporations Amendment (Crowd-sourced Funding for Proprietary Companies) Bill 2017

Department of Prime Minister and Cabinet: Crowd-sourced Equity Funding for Proprietary Companies - Early Assessment Regulatory Impact Statement

ASIC: Applications for crowd-funding licences open 29 September 2017

Login to post comments
Array ( [format] => html [Itemid] => 160 [option] => com_k2 [view] => item [task] => 882:legislation-extends-crowd-funding-to-proprietary-companies [id] => 882:legislation-extends-crowd-funding-to-proprietary-companies )