The Corporations and Markets Advisory Committee (CAMAC) has released a discussion paper Crowd sourced equity funding.
Crowd sourced equity funding (CSEF) refers to schemes through which a business seeks to raise funding, particularly early-stage funding, through offering debt or equity interests in the business to investors online. Businesses seeking to raise capital through CSEF typically advertise online through a crowd funding platform website, which serves as an intermediary between investors and the business.
The CAMAC discussion paper notes that CSEF is already theoretically available in Australia, but subject to compliance by the issuer and the online intermediary with fundraising, licensing and other requirements under the Corporations Act. This paper examines the nature of those requirements and raises for consideration, taking into account approaches in other jurisdictions, whether the Australian provisions should be adjusted in some manner for CSEF.
ASIC issued its guidance on the issue here.
The CAMAC discussion paper contains options for reform in relation to crowd sourced equity funding (CSEF) in Australia including:
- no regulatory change;
- liberalising the small scale personal offers exemption in the fundraising provisions;
- confining CSEF exemptions to sophisticated, experienced or professional investors;
- making targeted amendments to the existing regulatory structure for CSEF open to all investors; and
- creating a self contained statutory compliance structure for CSEF open to all investors.
