Following on from our earlier posts (Australia has no time to waste in implementing crowd funding and Is crowd funding an alternative means for raising capital?) on crowd-sourced equity funding (CSEF), it is good to see that Treasury has recently released its discussion paper for further consultation.
Crowd-sourced Equity Funding – Discussion Paper, December 2014
Treasury has recognised that CSEF may present an important source of additional funding to promote innovation and productivity growth, particularly for small businesses and start-ups. Treasury also notes (as previously suggested by CAMAC) that the current regulatory requirements present a barrier to the widespread use of CSEF in Australia.
Although a final decision has not been made on the preferred CSEF framework for Australia, Treasury is seeking feedback on potential CSEF models (and respective advantages and disadvantages of such models), including the model recommended by CAMAC in July 2014 reviewed in our last post, and the model that has recently been implemented in New Zealand which came into force in April 2014. The discussion paper includes a useful comparison between these different models, such as the differing approach to individual investor caps. The paper also provides an overview of considerations if the status quo is maintained.
The closing date for submissions is 6 February 2015 and we will be considering our responses, as well as any responses received from our clients, to the questions that have been raised by Treasury.