Explanatory Memo on Australian Crowdfunding Legislation

Here is the explanatory memorandum on the Australian crowdfunding legislation that is expected to soon become law. Labeled by the Aussies as “Crowd-sourced funding” or CSF, the rules are designed to provide financing for innovative firms and additional opportunities for retail investors.  The memo, embedded below, is an easier read than the actual legislation as much (not all) of the legalese has been removed.

The main points of the Australian crowdfunding legislation includes eligibility requirements, processes for a crowdfunding offer to be posted and liabilities plus investor protection parameters. Industry participants have highlighted two aspects of the bill they believe should be changed:

  • A cooling off period that was increased from 48 to 5 days, and
  • A prohibition on proprietary companies from using the new rules. These are some of the smallest firms in Australia and were excluded for some reason.

Policymakers believe this new funding model will support emerging firms can facilitate innovation and contribute to productivity growth. Investment crowdfunding may provide new and innovative businesses with access to the finance they need to develop their product or service and grow. And that is good for Australia.

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