4 August 2015

Consultation paper on regulatory framework for small proprietary companies and crowd sourced equity funding

The Government is making it easier for small businesses to access the capital they need to grow and thrive by removing obstacles to crowd-sourced equity funding. This change compliments the expanded tax concessions for Employee Share Schemes introduced in our 2015 Budget which passed in the last sitting of Parliament.

I am pleased today to release the Abbott Government’s consultation paper on extending crowd-sourced equity funding (CSEF) to proprietary companies. The paper also asks if there are unnecessary compliance costs and fundraising constraints under the Corporations Act for proprietary companies.

We committed to this important consultation as part of our $5.5 billion Growing Jobs and Small Business package in the 2015-16 Budget.

A key element of the paper is a proposal to extend CSEF to proprietary companies. We have listened to feedback provided during earlier consultation on a possible CSEF framework and are now seeking views on whether the forthcoming CSEF framework for public companies should be extended to proprietary companies.

The consultation paper also sets out the Government’s intended approach to a CSEF framework for public companies. The Government is developing legislation to implement this framework and intends to introduce it to Parliament in the Spring sittings. Draft legislation will be released for public consultation prior to its introduction.

Industry are supportive of this focus on CSEF by the Abbott Government. AVCAL CEO Yasser El-Ansary  said: “We welcome the progress made on the policy framework to support equity crowdfunding. Australia has been lagging behind other developed economies in this area and we have some catching up to do.”

Jonny Wilkinson, Co-Founder, Equitise: "We've relished the opportunity to work with Minister Billson and his office in putting together such an important policy for businesses to access the capital they need to grow. Having launched in New Zealand earlier this year, we are excited about launching retail equity crowdfunding offers in the Australian market later this year."  

The paper also considers areas of the Corporations Act which may be unnecessarily restricting the ability of small proprietary companies to raise capital to invest and grow. 

It specifically discusses whether it may be possible to simplify: the requirement to make an annual solvency resolution; the requirement to maintain a share register; the execution of documents; and completing and lodging forms with the regulator, and it also seeks views on other areas of the law that may be burdensome.

Of particular interest to many of the small businesses and entrepreneurs I have visited over the past few months is  the  debate around  the limit of 50 non‑employee shareholders for proprietary companies and the ‘small scale offerings’ exception to the disclosure requirements. This is covered in the consultation paper.

It is important to gauge stakeholder opinion on these measures. The consultation paper is now available for comment at www.treasury.gov.au. I welcome industry participation in the consultation process and encourage interested stakeholders to make a submission. Submissions close on 31 August 2015.