CROWDFUNDING LAWS TO UNLOCK ACCESS TO FUNDS

Assistant Treasurer and Small Business Minster Kelly O’Dowyer has released details about “crowdsourced equity funding” laws, that will allow both start-ups and established small businesses to tap retail investors for equity financing via online platforms.

Under the new laws, participation in crowdsourced equity funding would be made available to public companies that had $5 Million or less in assets and turnover, and those companies would be able to raise up to $5 million in any year, Ms O’Dwyer said.

Investors will be granted a five-day cooling-off period while intermediaries will need to be licensed by the Australian Securities and Investments Commission.

“Technology-driven innovation is transforming our financial system and has the potential to deliver significant efficiency benefits and improve outcomes across the financial system” Ms O’Dwyer said.

“Right now in Australia, start-up’s and small business can’t actively access retail investors due to significant upfront and ongoing compliance cost and red tape.

“Changing this will unlock growth and unlock innovation”

The equity crowdfunding laws is a central plank of the Government innovation statement released in December.

They will bring Australia into line with jurisdictions including Canada, the United States, Britain and New Zealand, which allow retail investors to use digital platforms to provide equity to small business.

“This means the founders of a microbrewery in Tasmania can get their business off the ground with investments from mums and dads in places like Albury and Sydney”, Ms O’Dwyer said.

“We are keen to get it operating as soon as possible because we see [the laws] unlocking great benefits for business, for growth, for employment, and also for mum and dad investors to make investments”, she said.

“Traditionally, mum and dad investors have been very keen to put their money into the stock market and also into property. This will allow them an opportunity to also invest in business in Australia”.

Phil Nolis

DIRECTOR – OPTIMA PARTNERS