Crowd Sourced Funding: What you need to know about the new CSEF legislation

“The passing of the crowd-sourced equity funding (CSEF) legislation for Australian Small Business is great news, particularly in the current environment where it can be difficult to raise capital. However, there is likely to be some work required to ensure that companies are ready to access CSEF” Davide Costanzo, Moore Stephens - Director, Tax and Business Advisory

The legislation will enable companies that are currently Propriety Limited Companies to convert to Unlisted Public Companies and they will then be able to finalise documentation to enable them to raise up to $5 million per annum from the public.

Eligible companies will be required to have assets of less than $25 million and turnover of less than $25 million per annum.

The maximum investment that is available for a “Retail Investor” is $10,000 each twelve month period. There will be a “five day cooling off period” for Retail Investors.

There are no restrictions on the amount of investment that a Sophisticated Investor can make.
New unlisted public companies will be able to receive exceptions from some of the more costly government reporting requirements relating to a public company for up to five years including:
  • continuous disclosure requirements; 
  • holding Annual General Meetings; 
  • audit of accounts; 
  • providing paper Annual Reports.
 The Prime Minister indicated when he released the Innovation Statement in December 2015 that the Government believed there were thousands of companies interested in raising capital either through Crowd Funding or through an Early-Stage Innovation Company.

If this includes you, now is the time to start getting yourself ready to commence capital raising activities as soon as the legislation enables to do so in September 2017.
 
Please contact us if you would like further information, particularly regarding:
  • corporate governance advice on the operations of an unlisted public company; 
  • advice on structure and Business Planning; 
  • Budgets and Cashflow Forecasts; 
  • preparation of an Information Memorandum.
If you have any queries, please contact our Tax and Business Advisory Team on (08) 9225 5355