Using Crowd-sourced Funding to Start or Expand Companies
Public companies not listed on a stock exchange such as the Australian Stock Exchange (ASX) or Chi-X will soon be able to raise funds through crowd-sourced funding. From 29 September 2017, companies will be able to use crowd-sourced funding to raise funds to assist with start-up or expansion.
The Australian Securities and Investment Commission (ASIC) advise that eligible companies can raise up to $5 million a year, as long as they have less than $25 million in assets and annual revenue.
Anyone providing crowd-sourced funding services must hold an Australian financial services licence. Investors can invest up to $10,000 a year per company and, in exchange for the investment, the investor will receive shares in the company.
More information for intermediaries and companies seeking to raise funds is available at ASIC’s website. Further information about investing in a company via crowd-sourced funding can be found via a link on ASIC’s website.
Before considering this type of funding, make sure you read the information provided by ASIC and seek professional advice from your Accountant, Solicitor and Financial Advisor.