Crowd Funding – Regulatory Requirements

In the Business Matters newsletter of September 2012 we identified that crowd funding was a popular practice where people could use the internet to fundraise tapping into extensive contacts "known" via the internet. We then commented that ASIC had, until then, tolerated that practice but had warned that there may be some breaches of regulatory laws if the model strayed beyond a simple exchange of a reward or a product for money donated for example, a CD or the object of the fundraising exercise.

Crowd funding could potentially breach the following:

• The financial services licensing and disclosure requirements;
• Advertising for financial products requirements;
• Fundraising disclosure regimes; and