David Tink and Dillon Fuzi explore Australia's Crowd Sourced Equity Funding Regime for companies to raise vital capital.
Following our previous update in January 2018 with respect to ASIC licensing the first intermediaries under Australia’s Crowd Sourced Equity Funding Regime (CSEF), there have been a number of significant developments in the CSEF space.
The legislative development of the CSEF regime is continuing at a steady pace, with the Corporations Amendment (Crowd-sourced Funding for Proprietary Companies) Bill 2017 (Bill) clearing the House of Representatives in February. This was followed by the Bill being introduced and read for a first and second time in the Senate in mid-March.
The Bill is an important development for CSEF as, if passed, it will provide access to the CSEF framework to a much larger network of companies (as it will extend access from certain unlisted public companies to certain proprietary companies as well).
Some companies that are already eligible to use CSEF have wasted no time in utilising the regime to raise capital.
The first ever equity raised under Australia’s CSEF regime closed at the end of March and since then there have been four completed CSEF raisings, a number of offers have closed with another completion expected to be announced in the near future, and many more publically announced offers in progress or soon to be launched. This demonstrates that there is already a strong market for CSEF to operate within, providing benefits for both fundraisers and investors.
One recent example that demonstrates the potential of the CSEF regime involved the successful raising of $2.5 million from over 17,000 different investors, investing up to $10,000.
While Australia’s CSEF regime is still in its infancy stages, this conveys the message that startups and innovative companies can gain access to an exciting new source of equity investment.
Our team at KPMG Law can assist clients seeking to utilise the CSEF platform to raise capital.