The Corporations Amendment (Crowd-sourced Funding) Bill 2015 has been introduced to the House of Representatives. The object of the Bill is to establish a regulatory framework to facilitate crowd-sourced equity funding (or crowdfunding) by small, unlisted public companies.
Unlisted public companies with less than $5 million in assets and less than $5 million in annual turnover will be permitted to raise up to $5 million in funds in any 12 month period with reduced regulatory obligations and governance concessions for up to five years.
Companies raising funds through crowd funding will be required to release an offer document.
While investors will be able to invest an unlimited sum in crowdfunding, there will be a cap of $10,000 per issuer per 12-month period.
Intermediaries will need to will be required to hold an Australian Financial Services Licence and conduct checks on companies before listing their offer.
The amendments establish a new CSF regime by inserting a new Part into Chapter 6D, which deals with:
- eligibility requirements for a company that wants to make an offer under the CSF regime;
- the process to make a CSF offer, including the role and obligations of the CSF intermediary; and
- the prohibitions, liabilities and investor protections applying to CSF offers, including rules relating to defective disclosure documents and advertising restrictions.
CSF offers will generally be exempt from Part 6D.2, which contains provisions relating to prospectuses and other existing disclosure documents, and Part 6D.3, which deals with prohibitions, liabilities and remedies relating to offers of securities, by stating they do not apply to CSF offers, unless expressly provided for.
