CSF offers are subject to fewer regulatory requirements than
other forms of public fundraising, reducing burden on SMEs and startups looking
to raise funds.
The Australian Securities and Investments Commission (ASIC)
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 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.”
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