After months of discussion and numerous submissions, the Australian Federal Government today revealed new crowdfunding laws allowing eligible public companies with gross assets or revenue less than $5 million to raise up to $5m in equity from general (retail) investors.
CrowdfundUP's CEO Jack Quigley has been actively championing the benefits of crowdfunding on the Australian economy for a number of years now, and as a crowdfunding start up, CrowdfundUP had a specific interest in the new legislation.
Here's what you need to know:
- The legislation is limited to public companies only, with gross assets or revenue less than $5m
- Unlisted public companies are limited to raising $5 million a year from crowd-sourced funds
- Retail investors are limited to $10,000 investment for each start up per 12 month period
- The Minister has the power to exempt a platform provider from the requirement of holding an Australian Market License to operate a financial market
Here's what it missed:
- Although a positive step forward for Australia, it is discouraging that the majority of the intended users of the legislation are excluded, particularly existing startups
- The Australian government has effectively placed more administration and compliance costs on startups in order to access these funds
- The legislation failed to address real estate crowdfunding and other forms of lending, such as debt crowdfunding
While the new legislation is indeed a step forward for crowdfunding and start ups in Australia, the majority of crowdsourced projects will continue to be conducted under existing legislation which is confusing and outdated. Rather than set the legislation in stone, we hope the Australian Government monitors the new legislation and crowdfunding activity and adjusts as necessary.