Crowd Sourced Funding for Proprietary Companies Amendments Passed!
The Senate passed the Corporations Amendment (Crowd Sourced Funding for Proprietary Companies) Bill 2017 on 12th September 2018. The legislation will be operational 28 days after Royal Assent.
This means the legislation will be operational from approximately 15 October 2018.
The legislation withdraws the requirements in the original legislation that a private company had to convert to an unlisted public company to be able to raise capital from the public.
The main features of the legislation are:
- Private companies with less than $25 million in consolidated assets and annual revenue, that have their principal place of business and a majority of directors in Australia, are eligible to participate in the CSF regime.
- Eligible companies can raise up to $5 million in any 12-month period.
- Retail investors have an investment limit of $10,000 per company in any 12-month period.
- CSF offer can only be made via a licensed CSF Intermediary’s platform.
- Companies making CSF offer must prepare a CSF Offer Document that includes prescribed minimum information.
- For a private company to participate in the CSF regime, the proprietary company must have at least 2 directors and either one director (where there are only 2 directors) or a majority of directors must ordinarily reside in Australia.
- A proprietary company, which raises capital as a Crowd Sourced Funding Company, will have up to 3 groups of shareholders:
- Private company shareholders which are limited to 50 non-employee shareholders.
- There is no limit to the number of employee shareholders that the company can have.
- There is no limit to the number of CSF shareholders that the company can have.
- CSF company has to prepare annual reports and director reports.
- Proprietary companies, with more than $3 million in CSF capital, will need to be audited.
- CSF company has to notify ASIC when any CSF shares are issued.