Australia: Advisory body releases paper on crowdfunding equity
By Crowdfund Vibe Staff Writers
The Australian Corporations And Markets Advisory Committee (CAMAC) – a government regulatory advisory body – has released a discussion paper on equity crowdfunding. Its paper follows from an undertaking in the Government’s National Digital Economy Strategy to hold an independent review of the regulation of crowdfunding equity.
The CAMAC discussion paper notes that equity crowdfunding is already theoretically available in Australia, but subject to compliance by the issuer and the online intermediary with fundraising, licensing and other requirements under the Corporations Act. The paper examines the nature of those requirements and – taking into account approaches in other countries – asks whether the Australian provisions should be adjusted in some manner for crowdfunding equity.
CAMAC notes that this form of fundraising carries a series of risks for persons providing funds through this means. While risks may be present in any capital raising process, the central role of the Internet means that the number of persons potentially affected can be significantly greater than for more traditional means of fundraising. It also examines the degree of scrutiny of these offerings, and the information to be provided to investors, compared with traditional prospectus or other disclosure requirements.
Another issue it explores is the obligations that should rest on the online intermediaries (platform operators).
The discussion paper seeks views on all of these issues, as well as:
- whether CSEF should be regulated in any different manner than any other form of corporate fundraising
- whether any form of regulatory accommodation for CSEF should be limited to specific situations, such as offers to sophisticated investors, falling well short of general public offers open to all investors, or
- whether the Australian legislation should ‘cherry pick’ CSEF approaches in some other jurisdictions but within the context of otherwise maintaining the existing regulatory structure, or
- whether the Australian legislation should regulate the process of CSEF in the same self-contained manner as, say, under the JOBS Act in the USA, which is intended to exhaustively regulate this form of fundraising in that jurisdiction.
CAMAC has asked for written submissions by Friday 29 November 2013.