At the end of last year, AltFi published a report about the state of the crowdfunding regulatory framework in Australia, describing the current laws and likely future developments. In 2012, the Australian Securities and Investments Commission (ASIC) indicated that equity crowdfunding could have been regulated by chapter 6D of the Corporations Act, which is very restrictive and obliges corporations to present tons of documentation in support of fundraising rounds. In May 2014, the Australian Corporations and Markets Advisory Committee (CAMAC) released an update on equity crowdfunding with several requirements for businesses raising funds and for investors, including issuer and investor caps.
Following on from the CAMAC’s report, in its federal budget released on May 2015, the government for the first time recognised equity crowdfunding as a viable alternative funding option, but without disclosing details of a specific model.
In August 2015, the Australian government published a consultation paper – entitled “Treasury Consultation Paper Facilitating crowd-sourced equity funding”. The paper sought opinions on hypothetical changes to the current regulation. The closing date for submissions was 31 August 2015.
On 3 December 2015, the Government tabled in Parliament the Corporations Amendment Bill 2015 – the so-called “Crowd‑Sourced Funding Bill”. The Bill builds on recommendations of the CAMAC in its report on the crowd sourced equity funding (May 2014), as well as responses to the Treasury Consultation Paper (August 2015).
The Bill adds a new section to chapter 6D of the Corporations Act, which contains provisions for businesses that want to raise funds through the crowd. The Bill suggests an alternative disclosure regime for small unlisted companies, lighter than the current one. Moreover, businesses are allowed to raise funds of up to $5 million a year, with no more than $10,000 coming from any one investor.
The draft was presented for the first time on 3 December 2015 in the House of Representatives and was approved – after three readings – on February 2016. On 22 February 2016, the law was introduced to the Senate for the first time, but on 17 April 2016 it lapsed on prorogation.
The current status of the law is “not proceeding”, and even if it was approved by the House of Representatives, it needs to be approved by the Senate as well, before being presented to the Governor for assent.
When the Prime Minister Malcolm Turnbull – former lawyer, investment banker and tech entrepreneur – was appointed, the fintech/AltFi community hoped for a more positive future and regulatory environment for start-ups and tech companies. But the law is still buried in the Senate, together with the expectations of local disruptors.