The legislation known as the Corporations Amendment (Crowd-Sourced Funding) Bill 2017 was passed by the Australian Parliament in March 2017.

What Is Crowd Sourced Funding?

Crowd Sourced Funding (CSF) is a type of corporate capital raising whereby a company seeks funds, in small amounts, from a large number of individual investors in return for securities for the company. CSF involves:

  • Companies (issuers) that propose to raise funds;
  • Intermediaries that host the platform through which offers are made to crowd investors;
  • Crowd investors.

Under the CSF regime proposed in the Bill, small unlisted companies could raise up to $5M a year, with no more than $10,000 coming from any one retail investor.

Only unlisted public companies would be able to use CSF.

However proprietary limited companies can convert to an unlisted public company so that they are able to utilise this legislation. Eligible companies are exempt from various requirements otherwise applicable to public companies (the Annual General Meeting requirement, as well as various reporting and audit requirements).

The audit exemption ceases when the company raises $1M from investors.

Eligible CSF Company

At the time of the offer, the company making the offer must be an ‘eligible CSF company’, which is a company that satisfied the following conditions:

  • the value of the consolidated gross assets of it and its related parties must be less than $25M at the time it is determining its eligibility to crowd fund (the “assets test”) (a related party, for the purpose of the CSF provisions, is a related body corporate or an entity controlled by a person who controls the company or an associate of that person);
  • the consolidated annual revenue of it and its related parties must be less than $25M (the “turnover test”);
  • neither it nor a related party is a listed corporation (as listed corporations generally have access to other forms of equity raisings such as rights issues and share purchase plans);
  • neither it nor a related party has a substantial purpose of investing in securities or interests in other entities or managed investment schemes.

Issuer Cap

The offer must comply with an “issuer cap” of $5M in any twelve month period, calculated taking into account:

  • the amount sought to be raised under the current offer;
  • all amounts raised from previous CSF offers made within the twelve month period preceding the current offer;

Making a CSF Offer

An issuer must, for each CSF offer:

  • prepare a CSF offer document containing clear, concise and effective information, as specified in the regulations (for instance, information about the company and its business, the securities on offer, how the proceeds from the offer will be used);
  • obtain the consents of persons associated with the offer document;
  • publish the offer document (including, or together with, the offer itself) on the platform of a single CSF intermediary;
  • have only one CSF offer open at any one time

CSF Investors

CSF Investors must:

  • make their applications in response to a CSF offer via the intermediary’s offer platform, to ensure that they have the various protections of the CSF regime (such as the communication facility, the risk warning and cooling-off rights);
  • provide the application money via the intermediary, to ensure that the money is handled according to the client money provisions and is subject to the CSF rules for when money is paid to the issuer and refunded to applicants.

Corporate Governance Concessions

The Bill provides a CSF issuer with corporate governance concessions for five years from the date of registration as a public company if it:

  • satisfies the CSF eligibility criteria at the time of registration as a new public company and at the end of the relevant financial year; and
  • intends to crowd fund at the time it is registered; and
  • completes a CSF offer within twelve months of registration.

The corporate governance concessions are:

  • an exemption from holding an Annual General Meeting;
  • the option to provide financial reports to shareholders online only;
  • not being required to appoint an auditor;
  • not being required to have audited Financial Reports until more than $1M has been raised from CSF offers or other fundraising offers requiring disclosure.


Unlike other disclosure documents, a CSF offer document will not need to be lodged with ASIC. However, ASIC will have stop order powers where a company offers securities under a defective CSF offer document.

Professional Advice

Please contact me (Shantanu) for further advice if you’re interested in raising capital utilising Crowdfunding.