Australian financial markets regulator licenses first crowd-sourced funding intermediaries
The Australian Securities and Investments Commission (ASIC) has licensed the first crowd-sourced funding (CSF) intermediaries under the new CSF regime.
Draft legislation was released to extend crowd-sourced equity funding (CSEF) to proprietary companies with the 2017‑18 Budget. The Bill was passed in the Australian Parliament on 22 March 2017, and came into effect on September 29, 2017, establishing a regulatory framework to facilitate crowd-sourced equity funding in Australia. One of the key objectives of the regime is to reduce the regulatory burden on start-ups and small to medium sized companies associated with raising funds from the public via the issue of ordinary shares, as CSF offers are subject to fewer regulatory requirements than other forms of public fundraising.
ASIC has issued guidance to assist companies seeking to raise funds through CSF (Regulatory Guide 261 Crowd-sourced funding: Guide for public companies (RG 261). ASIC has also published a template CSF offer document to help companies prepare their CSF offers.
Now seven companies have been issued with Australian Financial Services (AFS) licence authorisations to act as intermediaries able to provide a crowd-sourced funding service. With the grant of these new authorisations eligible public companies will be able to use the CSF regime to raise capital by making offers of ordinary shares to investors via the on-line platform of one of these intermediaries.
The newly licensed intermediaries have now been added to ASIC’s register of AFS licensees. ASIC’s free online search can be used by investors, potential crowd-sourced funders and others to confirm the authorisations held by individual licensees. ASIC encourages both CSF investors and companies to check whether their intermediary holds an AFS licence with appropriate authorisation to provide CSF services.
ASIC has previously highlighted the importance of investors understanding both the benefits and risks of investing via crowd-sourced funding. Further information regarding crowd-funding can be found on ASIC’s MoneySmart website.
ASIC Commissioner John Price said, “ASIC has been assessing applications as a matter of priority, as suitable intermediaries needed to be licensed before fundraising under the new regime could commence. Intermediaries have an important gatekeeper role which will be key to building and maintaining investor trust in crowd-sourced fundraising, so we are pleased to have now issued the first tranche of authorisations.”