The Pool Available for Crowdfunding Just Got Bigger
On 12 September 2018, the Corporations Amendment (Crowd-sourced Funding for Proprietary Companies) Bill 2017 passed extending the Australian Equity Crowdfunding regime and allowing Australian private companies to raise money from retail investors without having to convert to an unlisted public company.
From early October, Australian private companies with an annual turnover or gross assets of up to $25 million will be able to offer shares to everyday investors via an ASIC-licensed crowdfunding platform and raise up to $5 million a year.
Investors can put up to $10,000 a year each into an unlimited number of ideas, giving private companies the opportunity to raise funds from potentially hundreds of thousands of investors.
Private companies with crowdfunded shareholders will, however, be subject to a range of additional obligations:
- Now required to prepare annual financial and directors reports in accordance with Accounting Standards;
- Subject to related party transaction and takeover rules;
- Include details about the offer and shareholders as part of their company register; and
- If raising $3 million or more via crowd sourcing, audited financial statements are now required (increased from $1 million).
These amendments have been long awaited by many and present a great opportunity for companies wanting to raise funds through equity crowdfunding. Contact your trusted adviser at PKF if you want to explore how crowdfunding can benefit your business.