Funding opportunities for small businesses and startups have just got a whole lot bigger thanks to new legislation surrounding equity fundraising for proprietary limited companies.
The legislation, which passed the House of Representatives today, will extend crowdfunding opportunities to proprietary companies. Crowd sourced funding (CSF) has become a popular form of funding amongst entrepreneurs.
The legislation will extend the existing CSF framework to proprietary companies. It will allow these companies to access an alternative form of finance with additional obligations that will protect investors.
The measure will allow proprietary companies to access CSF without having to transition to a publicly listed company.
The Bill will amend the existing Corporations Amendment (Crowd-sourced Funding) Act 2017 and will be monitored by the Australian Securities and Investment Commission (ASIC).
Access to finance is crucial to new businesses and startups and the amendment to the Act is set to have significant impact.
Jonny Wilkinson co-founder of leading equity crowdfunding platform, Equitise is thrilled at the new legislation, saying it will open up funding channels for startups and businesses that had previously been locked out. He says the move will also allow everyday investors in Australia and New Zealand to access high-growth companies.
“Having a formalised structure and process for smaller proprietary companies to raise funds from ‘the crowd’ (their customers, friends and family) will be a huge boost to small businesses and the economy, driving both growth and employment. In turn, it also gives everyday investors the opportunity to invest in these companies and potentially make a return,” Wilkinson said.