David Garry & Associates provides restructure advice and ongoing compliance services to businesses and platforms operating within the crowdfunding space in Australia, with a significant focus on supporting the new crowd-sourced funding legislation effective from September 2017. For a summary of the key facts relevant to crowd-sourced funding in Australia, read below here:
David Garry & Associates can assist businesses in the following ways:
small businesses looking to raise capital ›
compliance support for licenced platforms ›
Click through to read our thoughts on crowdfunding as featured in The Advertiser on Saturday 30th September.
Small businesses looking to raise capital
We work together with entrepreneurs, growing companies and management teams to successfully raise capital on a crowdfunding platform. We have links with numerous high profile crowdfunding platforms to ensure that businesses are prepared and a good match for any crowdfunding platform before applying. Specifically, we can assist businesses with:
- understanding the realities of raising equity capital and how the legislation works
- identifying your target investment audience and helping choose the right crowdfunding platform
- developing a funding strategy appropriate to your company
- establishing your equity structure, issue price and capital requirements
- shaping your company in readiness to take on investors
- managing due diligence enquiries
- understanding your corporate governance requirements and share registry processes
- providing support throughout the entire capital raising campaign process
CSF intermediaries (platforms)
We can help you implement a robust and efficient compliance plan to ensure you remain compliant with the latest crowd-sourced funding legislation on an ongoing basis. We can also partner with you to ensure all investee businesses who use your platform are compliant and structured appropriately. In particular we can assist licensed platform providers with:
- understanding, monitoring and reporting on the compliance obligations of holding a CSF licence.
- establishment of suitable nominee shareholder structures and maintenance of shareholder registers, including the establishment of nominee companies and bare trusts (we have 40 years experience in this area).
- acting as an outsourcing partner for vetting, due diligence, and advisory to potential and actual crowdfunding companies looking to raise capital via your platform.
Engaging us as your outsource partner will significantly save you time and costs, allowing you to focus on growing your business.
Overview of Crowd-sourced funding in Australia
The new CSF Legislation effective 29 September 2017
The Corporations Amendment (Crowd-sourced Funding) Act 2017 amends the Corporations Act 2001, and makes minor amendments to the Australian Securities and Investments Commission Act 2001, to provide a legislative framework for crowd-sourced funding. The CSF regime aims to reduce the regulatory requirements for public fundraising while maintaining appropriate investor protection measures. A provider of CSF services must hold an Australian financial services (AFS) licence.
The Act received Royal Assent on 28 March 2017 and takes effect from 29 September 2017.
How much can be raised under the new legislation?
Crowd-sourced funding (CSF) (also called equity crowd funding or crowd-sourced funding of shares) is a new way for eligible start-ups and small and medium-sized companies to raise money from the public to finance their business. Companies typically raise small amounts from a large number of investors. Each investor can invest up to $10,000 a year in a company and in exchange they'll receive securities in the form of shares. Eligible companies can raise up to $5 million a year using crowd-sourced funding but they must have less than $25 million in assets and annual revenue.
What company structure do I need to be eligible?
This type of fundraising is only available to new and existing Australian public companies who want to get funding by issuing ordinary shares but are not listed on a stock exchange such as the ASX or Chi-X. New companies or companies that have recently become public, may not have to comply with some reporting and corporate governance obligations that usually apply to public companies. For example, the company may not have to hold an Annual General Meeting of members or appoint an auditor to check financial statements for up to 5 years.
How does crowd-sourced funding work in Australia?
By law, eligible companies must use a crowd-sourced funding (CSF) platform (usually a website) to make their investment offer. The website is run by an intermediary that must have an Australian Financial Services Licence (AFSL) which authorises them to provide crowd-sourced funding services.
As part of the AFSL conditions, intermediaries must adhere to certain ongoing compliance obligations such as warning investors about the risk of investing, making available copies of offer documents, and including a question and answer section on their website for investors.
From 29 September 2017, you will be able check ASIC Connect's Professional Registers to see if the website operator has an Australian Financial Services Licence (AFSL) that allows it to legally provide crowd-sourced funding services.
Click through to read our thoughts on crowdfunding as featured in The Advertiser on Saturday 30th September.
If you have any questions or would like to know more about our services, please contact us.