Supporting small business is a clear area of focus in the 2015-16 Federal Budget released yesterday. Among its small business reforms proposed over the next four years, the Government intends to provide $7.8 million to ASIC to develop, implement and monitor a regulatory framework to facilitate the use of crowd-sourced equity funding (CSEF) in Australia.
Building on the Treasury’s discussion paper from December 2014, the Budget acknowledges that CSEF ‘has the potential to increase funding options available to entrepreneurs to assist in the development of their business.’ Since the advent of Kickstarter in 2009, the growth of online, non-equity based crowd-funding platforms within the Australian technology, media and entertainment industries demonstrates an interest among entrepreneurs and investors for alternative sources of capital raising to get start up projects off the ground.
While the Budget contemplates that a CSEF regulatory framework would include simplified reporting and disclosure requirements for raising funds online from a large number of investors, it does not provide further details on the intended framework. It is encouraging to see further funding committed to this area, but the Government also needs to ensure it does not fall behind its international counterparts (including New Zealand, the UK and the USA) by failing to provide a workable legal avenue for the operation of CSEF in Australia in the near term.
The McCullough Robertson Corporate Advisory team will continue to monitor this area closely for updates from ASIC and Treasury.