ASIC licenses crowd-sourced equity funding platforms

First licences issued under new crowd-sourced funding rules

The Australian Securities and Investments Commission (ASIC) has issued licences to seven companies as part of the new crowd-sourced equity funding regime.

ASIC revealed today it had issued the relevant Australian Financial Services (AFS) licence authorisations to Big Start, Billfolda, Birchal Financial Services, Equitise, Global Funding Partners, IQX Investment Services and On-Market Bookbuilds.

Eligible businesses will now be able to raise capital by offering shares through the online platforms operated by the seven “CSF intermediaries”.

The Corporations Amendment (Crowd-sourced Funding) Act 2017 was passed in March last year and came into effect in September.

“ASIC has been assessing applications as a matter of priority, as suitable intermediaries needed to be licensed before fundraising under the new regime could commence,” ASIC Commissioner John Price said in a statement.

“Intermediaries have an important gatekeeper role which will be key to building and maintaining investor trust in crowd-sourced fundraising, so we are pleased to have now issued the first tranche of authorisations.”

Introducing the legislation in November 2016, Treasurer Scott Morrison said the it would open up “new and innovative sources of capital funding for Australian small businesses and start-ups”.

“Crowd-sourced equity funding is a truly innovative concept,” Morrison said. “It allows businesses to obtain capital from a large number of investors through an online platform, where each investor typically contributes a small amount of money in return for an equity stake in the business.”

Offers via the CSF intermediatries are subject to fewer regulatory requirements than other forms of public fundraising, ASIC says.

Eligibility requirements to make a CSF offer include that a company not exceed an assets and annual revenue cap of $25 million, not be a listed company, and not have as a substantial purpose investing in other companies or schemes.

Those that meet the requirements can raise up to $5 million via equity crowdfunding. 

ASIC last year released a guide to the new rules (PDF).

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