ASIC allows intermediaries to crowd-sourced funding

by AB12 Jan 2018
ASIC has given the green light to seven companies allowing them to become intermediaries able to provide crowd-sourced funding (CSF) services. 

The move allows eligible companies to use the new CSF regime to raise capital by offering ordinary shares to investors through licensed intermediaries’ online platforms. 

Through the regime, start-ups and SMEs can raise funds from the public with fewer regulatory requirements compared to other means of public fundraising. It is designed to provide SMEs with a new means to access capital for growth and development. 

ASIC Commissioner John Price said that the issuance of the first CSF intermediary licences marked a milestone in Australia’s crowd-sourced funding scheme. 

“Intermediaries have an important gatekeeper role that 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,” he said.

The new CSF regime comes after the Corporations Amendment (Crowd-sourced Funding) Act 2017 took effect in September 2017. 

Only unlisted Australian public companies can use the fundraising scheme— and they need to have less than $25m in assets and annual revenue to qualify. Eligible firms can raise up to $5m a year through CSF, while investors can invest up to $10,000 a year in these companies through CSF intermediaries.

Kelly O’Dwyer, the minister for revenue and financial services, said in a statement that the government welcomes ASIC’s move. 

“This new source of funding creates opportunities, especially for small businesses in the early growth stage. This is all about delivering more jobs, higher wages and greater growth for our economy by ensuring Australians are able to harness new and innovative ways of developing and growing businesses,” she said.

The recipients of the first batch of licences are Big Start, Billfolda, Birchal Financial Services, Equitise, Global Funding Partners, IQX Investment Services, and On-Market Bookbuilds.