Crowdfunding Regulations in Australia

Start-ups Eye Crowdfunding, Share Plan Reviews

Sydney, Australia Image from: freedigitalphotos.netSelf-assessment by the ‘crowd’ often validates a business model or investment opportunity.

It was pleasing that my three-week tour Down Under coincided with the federal government’s announcement of reviews into Australian crowd-sourced equity funding (CSEF), which will consider whether the corporate law properly regulates and facilitates CSEF; and a review of employee share schemes (ESS) to help address the barriers faced by start-up companies in attracting and retaining staff. Both were announced on June 12 and featured in this column on June 14.

Canberra has now joined the global “crowd of governments” to review early stage equity market regulation. Legislation has often followed. For example, the JumpStart Our Business Startups (JOBS) Act, signed into US law by President Barack Obama on April 5 last year, was primarily designed to address deficiencies of the Securities Exchange Act of 1933 which currently regulates early-stage equity investing some 80 years later.

The primary aims of such legislation, as per the reviews in Australia, are to facilitate risk capital to early-stage investment opportunities. In the US, there has been a lot of debate about whether it is appropriate for unaccredited (non-sophisticated) investors to invest in this end of the market.

David DrakeHowever, self-assessment by the “crowd” often validates a business model or investment opportunity – companies such as eBay would not exist if there was widespread fraud through online commerce. Securities legislation should be modernised to incorporate the phenomena of online commerce.

This wave of early-stage equity funding pathways is also being explored in Europe through platforms such as CrowdCube (UK), Symbid (The Netherlands) and Seedrs (UK). These platforms to some degree follow the principles of the Australian Small Scale Offerings Board, which has been facilitating early-stage equity funding to companies in Australia over the last seven years, as examined in detail by the Financial Review’s Capital magazine on March 27. ASSOB has helped more than 200 companies raise about $135 million of equity capital under section 708 of the Corporations Act, which allows companies to make a “small scale offer” to 20 non-accredited investors within a 12-month timeframe.


JOBS act a win for startups and economy

by spike_mike_returns

(CNN) -- The Jumpstart our Business Startups, or JOBS Act, is a win for entrepreneurship as well as bipartisan politics, and given economic hardship, unemployment and political bickering, it's time for a win. Next step: Declare victory and unleash an economic winning streak.
On Thursday, President Barack Obama signed the JOBS Act with overwhelming bipartisan support. The bill makes it easier for startups to raise money, to stay private when they need to and to go public when the time is right. Overall, it promotes a pro-entrepreneurship agenda.The bill's "crowdfunding" provision is getting the most attention

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