First crowdfund licences granted
John Price: Eligible public companies can now raise capital through CSF intermediaries
Even though the Australian government failed to pass amendments to the equity crowd source funding (CSF) regime before the end of last year, the Australian Securities and Investments Commission (ASIC) has granted seven companies licences to allow them to act as CSF intermediaries under the regime.
The first batch of licences has been issued to Big Start, Billfolda, Birchal Financial Services, Equitise, Global Funding Partners, IQX Investment Services and On-Market Bookbuilds.
“ASIC has been assessing applications as a matter of priority, as suitable intermediaries needed to be licensed before fundraising under the new regime could commence,” said ASIC commissioner John Price.
“Intermediaries have an important gatekeeper role which will be key to building and maintaining investor trust in crowd-sourced fundraising, so we are pleased to have now issued the first tranche of authorisations.”
Eligible public companies will now be able to use the CSF regime to raise capital by offering shares to investors via the online platform operated by one the intermediaries. They will be able to raise up to $5 million in funds through equity crowdfunding, with retail investors able to invest up to $10,000 per issuing company per year.
“Companies will now be able to raise funds through offers hosted by these intermediaries, with the first offers expected to be available shortly,” said Acting Treasurer Kelly O’Dwyer.
A regulatory framework to facilitate CSF in Australia was established after the Corporations Amendment (Crowd-sourced Funding) Act 2017 was passed last March.
However, under the current rules of the legislation, the CSF regime is only applicable to small public companies. Changes to extend the CSF regime to include propriety companies are currently before Parliament. Although due to delays, private companies will not be able to access the new funding method until at least August at the earliest.
Shadow Minister for the Digital Economy Ed Husic has hit out at the government for the hold-up.
“It’s been half a decade since initial steps were taken to introduce equity crowdfunding in Australia and we are only just celebrating registration of crowd funding platforms now, which really goes to show how much the government has been dragging the chain on this,” he said.
“Because the first set of laws pushed through by the government in March was so flawed and then the government couldn’t get its act together to get the next laws through parliament at the end of last year, we still don’t have an effective framework. This shows how badly the government has botched this process.”
When the amendments are passed, it will effectively remove what had been the single biggest barrier to startups raising capital through crowdsourcing platforms.
Previously, companies seeking to raise capital through crowdsourcing platforms were required to convert their proprietary structure into an unlisted public company.
Matthew Pinter, Billfolda founder and chairman of the Crowd Funding Institute Australia, said the issuance of the licences is nonetheless a “very positive step” for the crowdfunding sector.
“There are quite a lot of strong positives that flow from this. In terms of the entry hurdle, it will be appealing to scaling companies, not those that are at the ideation stage, so from that perspective we see a lot of growth down the track,” he said.
“The concern obviously is around the full nature of the proprietary amendments and whether they carry through relatively consistent with what’s there or whether there’ll be further controls or delay.
“There’s a viable model on the table for proprietary, and we just look to see that enacted as quickly as possible.”
When Billafolda launches later this month, Mr Pinter said each of the companies offered on the platform will accept minimum investments from as little as $250, specialising in sectors of envirotech, safety, tech and health.