The government has introduced legislation that will allow unlisted companies to raise up to $5 million via crowd-sourced equity funding.
The Corporations Amendment (Crowd-sourced Funding) Bill 2016 will enable unlisted public companies to “facilitate crowd sourced equity funding”, so long as the company has less than $25 million in assets and annual turnover, a marked increase from the $5 million asset and turnover cap imposed in the 2015 amendment.
“The bill also increases flexibility to support development of new and specialised financial markets, including crowd-sourced equity funding platforms,” the government said.
“In addition, the legislation extends the Treasurer’s powers to exempt specialised and emerging financial market operators from clearing and settlement licensing regimes.”
The government said the legislation would complement existing financial sector innovation policies such as tax incentives for angel investors, changes to crypto-currency taxation and “the push for an internationally competitive fintech industry”.
The bill stipulates that companies will need to meet the minimum disclosure requirement, and investors will have a $10,000 cap per company per year, as well as a grace period of 48 hours from making a commitment in which they can withdraw their investment.
“These reforms, along with the Turnbull government’s plan to give small and medium size businesses a tax cut, will play an important role in the transition underway in Australia’s economy,” the government said.
“The crowd-sourced equity funding framework will take effect six months from the date the bill receives royal assent.”
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