Crowd Sourced Funding Equity Raising In the Beginning

Accountant's Minute 195

In the Beginning……….

  • The original amendments to the Corporations Act required a Crowd Sourced Funding Equity Raising Company to be an unlisted public company.
  • The legislation was changed from 19 October 2018 to enable “propriety limited companies” as well as “unlisted public companies” that meet the eligibility requirements to be able to raise capital direct from the public as a Crowd Sourced Funding Equity Raising Company.
  • The legislation authorised Australian Security Investment Commission (ASIC) to appoint Intermediaries who are known as Crowd Sourced Funding Intermediaries.
  • Intermediaries are required to have an Australian Financial Services Licence.
  • Currently 14 Intermediaries have been appointed by ASIC.
  • The intermediaries wear “2 hats”:
    • as the “gatekeeper” representing ASIC to ensure that the legislation has been abided by;
    • as a “promoter” the Intermediary invites potential investors to list on their database and the Intermediary forwards details of companies seeking to raise capital who have been uploaded to that Intermediary’s website (referred to as the “platform” in the legislation).
  • The eligibility requirements to be a Crowd Sourced Funding Equity Raising Company are:
    • group turnover under $25 million per annum;
    • group gross assets under $25 million;
    • no member company listed on a stock exchange;
    • no member on a financial market;
    • not being used for a credit facility.
  • Eligible companies can raise up to $5 million in a 12 month period direct from the public for the issue of ordinary shares in the company.

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