Reform to the laws on equity sourced crowdfunding are expected to be passed in the Parliament this week to include 'eligible proprietary companies'.
The Corporations Amendment (Crowd-sourced Funding for Proprietary Companies) Bill 2017 amends the Corporations Act 2001 will amend the legislation that was passed by the Senate in March 2017 to introduce a new regulatory framework for crowd-sourced equity funding. (see previous story).
The amendment is to extend the crowd-sourced funding (CSF) framework for public companies to eligible proprietary companies.
The amendment will be subject to additional reporting requirements and accountability standards and provide that proprietary companies with shareholders who acquire shares through a CSF offer are not subject to the takeovers rules.
It will also introduce special investor protections for proprietary companies accessing the CSF regime and remove the temporary corporate governance concessions for proprietary companies that convert to or register as public companies to access the CSF regime.
CSF is recognised as an emerging form of funding that allows entrepreneurs to raise funds from a large number of investors.
Extending the CSF framework to proprietary companies will allow these companies to access an alternative form of finance with additional obligations that will protect investors.
The passage of the Bill can be found online.