Private companies to benefit from extension of crowd-sourced equity funding legislation

The Corporations Amendment (Crowd-sourced Funding for Proprietary Companies) Bill 2017 was introduced into Parliament on 14 September 2017.  If passed, as is expected, the Bill will extend the reach of the Crowd-sourced Equity Funding (CSEF) legislation that will at this stage apply only to public companies from 29 September 2017.

CSEF enables a large number of investors to make small financial investments in companies for an equity stake, thereby providing an effective tool for companies to raise funds.

The extension of the CSEF legislation to proprietary companies will mean such companies will not have to become public companies and incur the associated compliance costs, in order to access CSEF. 

The extension stands to particularly benefit start ups and small businesses that have limited access to funding.

The Bill also introduces protections for investors by requiring proprietary companies using CSEF to:

  • have a minimum of two directors;
  • prepare financial reports in accordance with accounting standards;
  • have financial reports audited if $3 million in CSEF is raised; and
  • comply with the related party transaction rules that apply to public companies.

The draft legislation to extend CSEF to private companies has bipartisan political support.  Once passed, the extension will take effect six months after royal assent.  In the meantime, if you have any questions regarding the pending changes, please contact:

Ed Cameron
Senior Associate
T: +61 3 9611 0179
M: +61 409 183 975


Meagan O’Connor
T: +61 3 9611 0106
M: +61 438 531 978