15 MONTHS ON: CAMAC VS. CSEF FOR PUBLIC COMPANIES

In June 2013 Advancing Australia’s Digital Economy set CAMAC the task of holding a comprehensive review of CSEF, a review that concluded with CAMACs report into Crowd Sourced Equity Funding in May 2014, in favour of facilitation of this innovation.
On the dissolution of CAMAC that month, the federal government announced that Treasury would progress the review into CSEF, supported by the confirmations by the Small Business Minister and inclusion in the Federal Budget in May, confirming spring parliament as the timeline for legislative action.
The table below tracks the progress from May 2014 to today’s announcement regarding Crowd Sourced Equity Funding for Public companies.
21 May 2014
4 August 2015
​3.1 Public company pg 29
​Issuers must be incorporated as a public company in Australia.
​Changes:
None
​Limited to certain small enterprises that have not raised funds under existing public offer arrangements.Relief from certain public company compliance costs would be available to newly registered or converted public companies. Reliefs include:
As an exempt public company should not be a disclosing entity, it would have no obligation to prepare a half-year financial report. (3.3.4, page 36)
Exemptions from disclosing entity rules
​Reports online only (3.3.4, page 36)
Allowing annual reports to be only provided online
CAMAC proposes suspending the need for an exempt public company to appoint an auditor, and have its annual financial report audited (3.3.4, page 34)
Exemptions from the need to appoint an auditor and have financial accounts audited, subject to a cap of $1 million raised from CSEF or under a disclosure exemption
CAMAC (…) proposes that the obligation to hold an AGM be suspended during the period that an issuer is an exempt public company (3.3.4, page 35)
​Exemption from holding an annual general meeting (AGM)
Exemptions will be available for a period of up to 3 years, subject to annual turnover and gross assets thresholds of $5 million (excepting the audit exemption). (3.5, page 47)
​Exemptions will be available for a period of up to 5 years, subject to annual turnover and gross assets thresholds of $5 million (excepting the audit exemption).
​Changes:
Addition of audit requirement where $1 million raised
​No more than $2-5 million is raised in any 12 month period (34.4)The proposed issuer cap should not include any funds raised under the sophisticated investors’ exemption in s 708 (4.5.4, page 60)
​Issuer may raise up to $5 million in any 12 month period, inclusive of any raisings under the small scale offerings exception but excluding funds raised under existing prospectus exemptions for wholesale investors.
Changes:
Combining existing, actively used exemptions into new cap of 5 million (and excluding possibility to use both CSEF and other exemption e.g. CO 02/273 (with theoretical cap of in excess 5 million under prior recommendations).
One class of shares, with the requirement that all the shares in a particular offer have the same price, terms and conditions. (4.3.3, page 55)
Permitted securities are one class of fully paid ordinary shares per CSEF offer. All shares in a particular CSEF offer must have the same price, terms and conditions.
​Changes:
None
Disclosure template 4.7.3 (mirrors Canada & US). CAMAC had specific recommendations (rather than just general statements).
Reduced disclosure requirements, including a tailored CSEF disclosure document. Required disclosures will relate to:

  • facts about the company and its structure, including financial statements;
  • facts about the CSEF raising; and
  • mandatory risk warnings.
Chanage
None
INVESTORS
21 May 2014​
4 August 2015
Caped at $2,500 in any particular CSEF issuer in any 12 month period, and may not invest more than $10,000, in total, in all CSEF issuers in that period (2.6.5 page 25).Caps administered by AFSL Licensed platform (5.16.3 page 122)

self-certified caps recommended
​investment caps for retail investors of:

  • $10,000 per offer per 12 month period; and
  • $25,000 in aggregate CSEF investment per 12 month period, self certified by investors.
Change
Cap increased

  • per issuer from 2,500 to 10,000; and
  • per annum from 10,000 to 25,000
All previously contemplated and analysed

(2.6.5, page 25)
(5.15.3, page 127)
Signature of risk acknowledgement statements prior to investment, including that:

  • investing in early stage companies is risky and the investor may lose the entirety of their investment;
  • investors may not be able to sell their shares;
  • the value of the investment may be diluted over time; and
  • investors have complied with the investor caps.
Change
​Confirmed that we will follow the wording used by Canada, US & UK re the above.
A crowd investor should have some cooling off and other withdrawal rights after entering into an acquisition agreement. (2.6.5, page )
Unconditional right to withdraw for 5 days after accepting offer. Additional rights in relation to material adverse changes during the offer period.
Change
​Confirmed 5 days (5 days used in current class order Co 02/273)