The Corporations Amendment (Crowd-sourced Funding for Proprietary Companies) Bill 2017 (the draft Bill) was released on 9 May 2017 for public consultation (consultation closed on 6 June 2017). The draft Bill, if enacted, would allow "proprietary companies" which meet certain eligibility requirements to have access to crowd-sourced funding (CSF).
Under the already enacted Corporations Amendment (Crowd‑sourced Funding) Act 2017 (Cth - No 17 of 2017) CSF will be available to Australian companies on 29 September 2017 - the date on which the Act commences. However, that Act limits the availability of CSF to "public unlisted companies". The draft Bill proposes to extend the CSF regime to proprietary companies and also proposes to remove the need for proprietary companies to transition to the "public company" type of company to be able to access CSF.
The extension of the CFS legislation was foreshadowed by the Federal Government in the May 2017 Budget with the draft Bill being being circulated on behalf of the Treasurer, Scott Morrison. The Budget committed to extending the reach of the CSF framework, by providing for $4.5 million to be made available to the Australian Securities and Investments Commission (ASIC) to implement the program.
The extension of the CSF regime is said by the Federal Government to be expected to be of particular benefit to technology companies and start-ups as these companies are not typically "public companies" which would not allow these companies to engage in CSF under the law as it currently stands.
The broad amendments proposed by the draft Bill extend the CSF regime to proprietary companies by:
More specifically the draft Bill proposes that:
The consultation having concluded the next step is for the actual Bill to be presented in Federal parliament which it is expected will happen as the Budget measures find their way into legislation. When enacted, the amendments proposed by the draft Bill are intended to commence the day after the end of the period of six months after Royal Assent to the Bill - if and when it is enacted.
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Corporations Amendment (Crowd-sourced Funding for Proprietary Companies) Bill 2017 draft Bill and EM - as reported in the TimeBase LawOne Service
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