Equity crowd funding back on the agenda

Following on from our post last year (Crowd funding: no joy for start-ups?) on crowd-sourced equity funding (CSEF), it is good to see that the Corporations Amendment (Crowd-sourced Funding) Bill 2016 (Cth) (2016 Bill) was presented before the House of Representatives on Thursday, 24 November 2016 by Treasurer Scott Morrison.  This is the second attempt by the Federal Government to introduce CSEF legislation after the Corporations Amendment (Crowd-sourced Funding) Bill 2015 (Cth) (2015 Bill) lapsed following the double dissolution from the election earlier this year.

Key changes in the 2016 Bill with respect to eligibility requirements include:

• increasing the gross assets test from $5 million to $25 million, and
• increasing the annual turnover test from $5 million to $25 million. 

Although these proposed amendments have expanded the number of companies who will be able to engage in CSEF, the regime is still limited to unlisted public companies.

At this stage, proprietary limited companies, listed companies and investment companies will not be eligible to participate in CSEF.  However, it is worth noting that a proprietary limited company will be able to choose to convert into a public company in order to access CSEF.

Additional information in relation to the 2016 Bill is set out in the Explanatory Memorandum.

The 2016 Bill is yet to be passed by the House of Representatives and if the Senate passes it by early next year, we would hope to see the 2016 Bill come into effect by 1 July 2017.  We will continue to monitor progress and are happy to answer any questions readers of the blog may have on developments.

Reece Walker, Ben Wood and Ravi Gosal