Crowd-sourced equity funding (CSF) is now available for proprietary companies. Up until recently, CSF was only available to qualifying unlisted public companies. As the vast number of companies registered in Australia are proprietary companies, the CSF regime was largely ineffectual.
We have previously published articles on how the CSF regime works in Australia. You can access those articles by checking out our Summer Report 2016 and Winter Report 2017.
Just to refresh your memory, in this article we will first give you a brief summary of what CSF is, and then summarise how CSF works differently for a proprietary company.
Crowd-sourced equity funding is a type of fundraising facilitated on-line that allows a large number of individuals – the crowd – to make small financial contributions towards a company in exchange for an equity stake in the company.
CSF is an alternative way to raise funds, especially for innovative and early-stage or growth-stage companies that may not have access to debt funding or traditional equity funding.
The level of disclosure required for companies to make CSF offers to the crowd is significantly less onerous than typically required in a prospectus and generally not prohibitively expensive.
The CSF regime kicked off in Australia in September 2017 but only applied to unlisted public companies. That meant that a proprietary company that wished to access CSF had to first convert from a private company to a public company. That all changed with the passing of the Corporations Amendment (Crowd-sourced Funding for Proprietary Companies) Act 2018, and now private companies can access CSF capital.
CSF works a bit differently for proprietary companies. Here is a summary of some key features:
If you would like to find out more about CSF or different fundraising options and strategies available to your business, please contact us to discuss.
Sandy Donaldson
Consultant
p. +61 8 8124 1954
e. Email me
This communication provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such. Professional advice should be sought prior to any action being taken in reliance on any of the information. Should you wish to discuss any matter raised in this report, or what it means for you, your business or your clients' businesses, please feel free to contact us.