CROWD-FUNDING LAWS PASS LOWER HOUSE

New legislation to allow public companies to raise money through crowdfunding passed through the lower house

The bill, in the form of an amendment to the Corprorations Act, would allow unlisted public companies with less than $5 million in assets and turnover to raise $5 million in funds from the ‘crowd’ over a year.
Currently Australia law does not facilitate promotion of investment in start-ups from regular Australians, despite frameworks existing in jurisdictions like New Zealand, the UK and the US for years now.
“The intent of this bill is to assist start-ups and other small businesses that may have difficulty accessing equity funding due to the costs of disclosure and other requirements, while protecting mum and dad investors,” minister for small business Kelly O’Dwyer said.
But shadow minister for start-ups Ed Husic disagreed, telling parliament the government had backtracked on its previous efforts of bipartisanship and co-operation on the bill.
“I never thought I would say this, but there were ministers in the Abbott government that were better at consultation than ministers in the Turnbull government,” Mr Husic told the house.
“Although it is early days and while they took up their commitment to bipartisanship, it appears the Turnbull government’s approach to bipartisanship in this space reflected its broader mindset — say one thing, do another.”
He used his speech in parliament to quote a number of stakeholders, including the Australian Private Equity & Venture Capital Assocation, The Business Council of Co-operatives and Mutuals, CrowdfundUP, Chartered Accountants and King & Wood Mallesons, who all had concerns around extraneous red tape, including the requirement that start-ups become an unlisted public company should they wish to attract funding from the crowd.
Additionally, each investor will be limited to investing $10,000 per company per year, and will be required to complete a “risk acknowledgment statement”.
“Despite a wave of industry criticism about the heavy handed regulatory approach applied to its equity crowd-funding bill, the Turnbull Government has refused to consider changes to its proposed laws,” Mr Husic said.


Mr Husic said the opposition would review the final report into the bill by the Senate Economics Committee — due in late February — before determining what changes it will propose to the draft equity crowd-funding laws.