Crowd-sourced equity funding licences
Crowd-sourced funding helps both start-ups and small to medium sized businesses and investors access the opportunities that are available from an innovative economy. From 29 September 2017, the new crowd-sourced funding (CSF) regime will come into effect and ASIC will begin accepting licence applications from CSF intermediaries.
Under the CSF regime, eligible public companies will be able to make offers of fully paid ordinary shares to a large number of investors via the online platform of a licensed intermediary. Generally, the CSF regime reduces the regulatory requirements for public fundraising and the intermediaries will play an important oversight role in this process.
For companies to access the benefits of the new CSF regime, ASIC must first license suitable intermediaries to provide crowd-funding services.
Providers of CSF services must hold an Australian financial services (AFS) licence. From 29 September 2017 ASIC will begin accepting applications from potential CSF intermediaries for AFS licence authorisations to provide a crowd-funding service.
If you are interested in exploring crowd-sourced funding as an option for your business, please do not hesitate to contact our office.
Martin van der Saag
Director
T: 02 9984 7774
E: martinv@northadvisory.com.au
Norman Ruan
Accountant
T: 02 9984 7774
E: normanr@northadvisory.com.au
“Crowd-sourced equity funding opens up new ways for start-ups and SMEs to raise capital from a broader pool of investors.”
About the author
Cayle Petritsch - Director & Wealth Advisor
Cayle Petritsch, Director and Wealth Advisor, works with our existing clients who have recognised the importance of business owners making strategic financial choices not only for their company, but for their personal finances too.
Cayle saw a great opportunity to expand North Advisory’s services into SMSF/superannuation, personal wealth management, asset protection services and other crucial personal finance facets that business owners need to consider.
His approach to wealth management allows you to receive highly personalised wealth advice. Working closely with Marius, Cayle understands the unique needs of every client, from their lifestyle and business goals to their retirement plans.
Key Takeaways
CSF Provides a New Capital Raising Pathway
Crowd-sourced equity funding gives start-ups and growing businesses access to investment from a larger and more diverse pool of individuals.
Licensed Intermediaries Are Central to the Regime
Only intermediaries with the appropriate financial services licence can host CSF offers, ensuring regulatory compliance and investor safeguards
Regulatory Framework Reduces Barriers
The CSF regime simplifies some fundraising requirements compared with traditional public offers, making equity funding more accessible for eligible businesses.
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Frequently Asked Questions
What is crowd-sourced equity funding (CSF)?
Crowd-sourced equity funding is a regulated method for start-ups and small to medium-sized companies to raise capital by offering shares to a large number of investors via an online platform.
Why do CSF intermediaries need a licence?
Intermediaries must hold an Australian Financial Services Licence (AFSL) with authorisation to provide CSF services so they can legally host and manage equity offers, ensuring regulatory oversight and investor protection.
Who issues the licences for CSF intermediaries?
The Australian Securities and Investments Commission (ASIC) issues licences and authorisations needed for intermediaries to provide crowd-sourced funding services.
What does the CSF regime mean for businesses?
Under the CSF regime, eligible companies can access a broader base of potential investors — offering equity through licensed platforms rather than relying only on traditional venture capital or bank financing.
Are there protections for investors in CSF offers?
Yes. Licensed intermediaries must meet regulatory obligations under the Corporations Act, including risk management and disclosure requirements aimed at protecting investors in CSF offers.
When did the new crowd-sourced funding rules actually start?
The new crowd-sourced funding (CSF) regime was introduced to commence from 29 September 2017.
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