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ARTICLE · 17 APRIL 2017

Equity Crowd Source Funding Part 1: A basic primer

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The CSF regime is an additional funding option to assist small-scale businesses raise funds from a number of investors.

AustraliaCorporate/Commercial Law
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On 28 March 2017 the Corporations Amendment (Crowd-sourced Funding) Act 2017 (Cth) (Act) received Royal Assent, paving the way for crowd-sourced equity funding.

What is Equity Crowd Source Funding?
It is a mechanism (an online platform) that will enable eligible companies to raise capital by offering securities (only new ordinary shares) in the company to a large number of investors, including retail investors.

Without the Act, a company may only offer securities to retail investors without a detailed and extensive disclosure document (generally referred to as a prospectus), if the offer falls within one of the limited exceptions set out in the Corporations Act 2001 (Cth). Failure to comply with this requirement is, amongst other things, a criminal offence.

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