We can provide restructure advice and ongoing compliance services to businesses and platforms operating within the crowdfunding space in Australia, with a significant focus on supporting the new crowd-sourced funding legislation effective from September 2017. For a summary of the key facts relevant to crowd-sourced funding in Australia, read below.
Equity Crowd-Sourced Funding Strategic Support
We work together with entrepreneurs, growing companies and management teams to successfully raise capital on a crowdfunding platform. We have links with numerous high profile crowdfunding platforms to ensure that businesses are prepared and a good match for any crowdfunding platform before applying.
We can assist clients in restructuring their business for the purposes of equity crowd-sourced funding, including the provision of a 'crowdfunding friendly' company constitution. We can also provide assistance to businesses in the following matters:
- understanding the realities of raising equity capital and how the legislation works
- identifying your target investment audience and helping choose the right crowdfunding platform
- developing a funding strategy appropriate to your company
- establishing your equity structure, issue price and capital requirements
- shaping your company in readiness to take on investors
- managing due diligence enquiries
- understanding your corporate governance requirements and share registry processes
- providing support throughout the entire capital raising campaign process.
Get in touch today to discuss your needs.
From the Knowledge Base
The new CSF Legislation effective 29 September 2017
The Corporations Amendment (Crowd-sourced Funding) Act 2017 amends the Corporations Act 2001, and makes minor amendments to the Australian Securities and Investments Commission Act 2001, to provide a legislative framework for crowd-sourced funding. The CSF regime aims to reduce the regulatory requirements for public fundraising while maintaining appropriate investor protection measures. A provider of CSF services must hold an Australian financial services (AFS) licence.
The Act received Royal Assent on 28 March 2017 and takes effect from 29 September 2017.
How much can be raised under the new legislation?
Crowd-sourced funding (CSF) (also called equity crowd funding or crowd-sourced funding of shares) is a new way for eligible start-ups and small and medium-sized companies to raise money from the public to finance their business. Companies typically raise small amounts from a large number of investors. Each investor can invest up to $10,000 a year in a company and in exchange they'll receive securities in the form of shares. Eligible companies can raise up to $5 million a year using crowd-sourced funding but they must have less than $25 million in assets and annual revenue.
What company structure do I need to be eligible?
This type of fundraising has recently (October 2018) been extended to Australian private companies. However, recognising that proprietary companies undertaking equity crowdfunding will bring on board CSF shareholders that most probably won’t have a personal connection with the business, the new legislation imposes additional requirements on proprietary companies to protect shareholders. Read more about these requirements here.
How does crowd-sourced funding work in Australia?
By law, eligible companies must use a crowd-sourced funding (CSF) platform (usually a website) to make their investment offer. The website is run by an intermediary that must have an Australian Financial Services Licence (AFSL) which authorises them to provide crowd-sourced funding services.
As part of the AFSL conditions, intermediaries must adhere to certain ongoing compliance obligations such as warning investors about the risk of investing, making available copies of offer documents, and including a question and answer section on their website for investors.
From 29 September 2017, you will be able check ASIC Connect's Professional Registers to see if the website operator has an Australian Financial Services Licence (AFSL) that allows it to legally provide crowd-sourced funding services.
Established in 1976, ABN Australia has helped more than 100,000 businesses choose and establish their preferred business structure here in Australia. Our longevity is a testament to the high level of customer service we provide, and the wealth of experience we bring to the table.