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ARTICLE · 22 JANUARY 2016

The Crowdfunding Bill: changing equity financing for start-ups

Holding Redlich
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The Bill aims to promote CSF for small, unlisted public companies and investment opportunities for small-scale investors.

AustraliaCorporate/Commercial Law
Darren Pereira
Darren Pereira
Georgia Appleby
Georgia Appleby
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On 3 December 2015, the Corporations Amendment (Crowd-sourced Funding) Bill 2015 was introduced into Parliament. The Bill aims to promote crowd-sourced funding or CSF for emerging small, unlisted public companies and provide increased investment opportunities for small-scale retail investors.

The Bill attempts to achieve this by implementing a two-pronged approach – removing existing barriers to CSF under the Corporations Act and promoting investment by increasing investor protections.

Removing existing barriers to CSF

Currently, the Corporations Act restricts the ability of small businesses and start-ups to raise equity via CSF as section 45A prohibits proprietary companies from exceeding 50 non-employee shareholders. Whilst such prescriptive limits are not imposed on public companies, they are also limited due to strict corporate governance and reporting requirements. This means that small emerging businesses often choose to remain proprietary despite

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