Industry news:
From 15 October 2018, a private company will be able to raise capital from the public.

The Senate passed the Corporations Amendment (Crowd Sourced Funding for Proprietary Companies) Bill 2017 on 12th September 2018.

Read through to learn the main features of the legislation…

The main features of the legislation are: 

  • Private companies with less than $25 million in turnover or gross assets, that have their principal place of business and a majority of directors in Australia, are eligible to participate in the CSF regime.

  • Eligible companies can raise up to $5 million in any 12-month period.

  • Retail investors have an investment limit of $10,000 per company in any 12-month period.

  • CSF offer can only be made via a licensed CSF Intermediary’s platform.

  • Companies making CSF offer must prepare a CSF Offer Document that includes prescribed minimum information.

  • For a private company to participate in the CSF regime, the proprietary company must have at least 2 directors and either one director (where there is only 2 directors) or a majority of directors must ordinarily reside in Australia.

  • A proprietary company, which raises capital as a Crowd Sourced Funding Company, will have up to 3 groups of shareholders:

    • Private company shareholders which are limited to 50 non-employee shareholders.

    • There is no limit to the number of employee shareholders that the company can have.

    • There is no limit to the number of CSF shareholders that the company can have.

  • CSF company has to prepare annual reports and director reports.

  • Proprietary companies, with more than $3 million in CSF capital, will need to be audited.

  • CSF company has to notify ASIC when any CSF shares are issued.

The amendments to the Crowd Sourced Funding legislation present a great opportunity for small/medium enterprises to raise capital, without having to mortgage assets or borrow funds. 

If you’d like to discuss this in relation to your business needs, please contact us