Treasury has released for public consultation a draft Corporations Amendment (Crowd-sourced Funding for Proprietary Companies) Bill 2017 which will extend Crowd-sourced Equity Funding (CSEF) to proprietary companies. Background.
The amendments will mean that:
- Proprietary companies that meet the eligibility requirements (including a minimum of two directors) will be able to access the CSF regime;
- Proprietary companies that have CSF shareholders will have to prepare annual financial and directors’ reports in accordance with accounting standards;
- Proprietary companies that raise more than $1 million from CSF offers will have to have their financial statements audited;
- Proprietary companies that have CSF shareholders will be subject to the related party transaction rules in Chapter 2E;
- Proprietary companies that have CSF shareholders will not breach the takeovers rules if their constitutions contain appropriate CSF exit arrangements that are complied with;
- Proprietary companies that make a CSF offer will have to include details about the offer and the shareholders as part of their company registers.
From 29 September 2017, under the Corporations Amendment (Crowd-sourced Funding) Act 2017, eligible public companies will be able to make offers of their shares, via an intermediary CSF service, using an offer document.
Unlisted public companies with less than $25 million in assets and annual turnover will be eligible to raise funds under the CSF regime. Eligible companies will be able to make offers of ordinary shares to raise up to $5 million in any 12-month period.
Newly created or converted public companies making CSF offers will not have to comply with certain reporting, audit and AGM obligations that would usually apply to public companies, for up to five years.
