Equitise is an investment crowdfunding platform set up to operate in New Zealand and Australia. While New Zealand created a bespoke regulatory regime to allow equity crowdfunding to evolve some time ago, Australia has struggled to enact new rules. This week, the Australian Senate published a report on the Crowd-Sourced Funding Bill. The Committee recommended the bill be approved – something that should take place later in the year. The update aslo included a list of comments provided by interested parties. Equitise, as an engaged and leading platform, submitted a comment letter (embedded below) signed by co-founder and Managing Director Jonny Wilkinson.
While Equitise supports the bill in its current form, it does see room for improvement. Their suggestions include:
- The current Bill only deals with a new form of Public Company and misses out on the 2 million SMEs who are mostly Proprietary Companies. The practical solution to this would be to allow all Australian Incorporated Companies (Proprietary and Public) to raise capital through an Australian Financial Service Licensed (AFSL) equity crowdfunding provider, as long as they meet the other eligibility requirements and do not exceed the $5 million issuance cap. On the basis that Treasury are currently preparing a piece of legislation to cater for Proprietary Companies we are happy in supporting this current Bill.
- One of the greatest potential threats to the fair and orderly operation of the market will be by introducing Cooling Off periods. The Bill misses the fundamental tenant of equity crowdfunding, it occurs in an open and transparent fashion where all investors have the same access and opportunity to invest without and form of duress. Cooling Off or the ability to rescind an investment will create opportunities for manipulation and will result in the unwinding of successful transactions or even the success of those which would have otherwise failed. None of the established and functioning equity crowdfunding markets utilise Cooling-Off periods and the pragmatic approach would be to allow platforms to apply their own discretion for the canceling of trades in situations where it is appropriate.
Equitise hopes that all parties come together and support the bill “so as we do not further complicate or delay this essential policy.”
The Equitise Comment Letter is embedded below.
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