The Corporations Amendment (Crowd-sourced Funding) Bill was passed by the House of Representatives in February, but quietly lapsed in the Senate despite a Senate committee giving their support for the passage of the bill. The bill lapsed at prorogation on 17th of April, the Senate resumed consideration of it on 2nd of May, but it then lapsed again on 9th of May at the dissolution of Parliament.
The future of a regulatory framework facilitating crowd-sourced equity funding in Australia now lies in the hands of the party that wins the election in July.
Both of the major parties have articulated a strong desire to empower innovation in Australia, develop a culture of entrepreneurship and capitalise Australia's strengths to boost business activity. Start-ups are seen as integral to developing future jobs and there is a need for policy that helps grow these companies. Both parties have expressed interest in the value of crowd-sourced equity funding as a method of financing these businesses.
It, therefore, seems likely that we'll see a new CSF bill brought before Parliament in the early term of the new government. However, what we see may differ from the lapsed bill due to the controversy surrounding that proposal.
The intention of the old CSF bill was to make it easier for small businesses to obtain funding. Whilst it reduced some disclosure, governance and reporting obligations in an attempt to reduce costs, many have criticised it for not doing enough to make this sort of funding accessible. In particular, there was concern around the requirement that start-ups become unlisted public companies in order to access crowd-funding. This can be complex and costly. The Bill required eligible companies to have less than five million in assets and annual turnover, which severely restricted access to the framework. Many feel the government needs to embrace an even lighter regulatory touch to make the framework more simple, accessible and effective.
Hopefully Australia will see a valuable and successful CSF framework being introduced in the near future.
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