Australian businesses will be allowed to equity crowdfund in the future, following the introduction of draft legislation by the Australian government.
In a 13-page draft bill released with the budget, all companies will be allowed raise up to A$10,000 from a single retail investor—a fundraising device which, at present, is only available to public companies.
Under the proposed legislation, marketing for crowdsourced funding will be restricted to companies with gross assets or annual turnover under $25 million. Advertising will also be restricted to licensed crowdfunding portals.
At this stage, it is unclear when the government plans on bringing the changes through and when they will go into effect. It is also unclear whether investors will have similar protections when buying equity through crowdfunding as when buying ASX-listed stocks.
The deregulation, which has been welcomed by industry, was held up initially by politics. As with legislation supporting fintech, the impetus to allow crowdfunding came from the opposition Labour Party, not the governing Liberals.