Let's get started.
In summary, who can access the CSF regime in Australia? Any of the below:
Private proprietary companies (Pty Ltd) incorporated in Australia (This is the most common)
Public unlisted companies (Ltd) incorporated in Australia
Entities that are unable to access the CSF regime in Australia:
A company incorporated outside of Australia (even an international company looking to build an outlet in Australia)
Public companies listed on any stock exchange
Unincorporated joint ventures or associations
Below is a snapshot of further requirements that companies must meet to be eligible for a crowd-sourced funding offer (CSF) within Australia.
Private proprietary company (Pty Ltd) (Most common)
Since October 2018, proprietary companies (Pty Ltd) have been able to access the Equity Crowdfunding regime. Below we've summarised some of the key legislation changes for Pty Ltd companies raising under the CSF regime:
CSF shareholders don’t count towards the 50 non-employee shareholder limit for Pty Ltd companies
Company must have at least 2 Directors
Company becomes subject to related party transaction rules under the Corporations Act
Company will have additional financial reporting obligations
If a Company raises $3m+ under CSF offers, it will be subject to additional corporate governance requirements, including appointing an auditor and preparing audited accounts
Company must keep record of all CSF shareholders in the share register
What companies may need to convert from Pty Ltd to Ltd?
Despite that it’s now possible for proprietary companies to use the CSF regime, it may not be suitable for some proprietary companies to be widely held.
For instance, proprietary companies that hold licences or otherwise operate in regulated industries should consider whether having large numbers of shareholders will give rise to issues under any other rules or regulations the company is subject to.
For example, licensing regimes that employ a “good fame and character” eligibility test or reporting obligation for licensees sometimes extend this test to associates of the licensee, which can include shareholders.
Conversion process time: 5-6 weeks
See below a guide on the conversion process from a proprietary company to a public company. We recommend that you get started on this process prior to launching an Expression of Interest campaign (see later). Note: the public conversion is not a pre-requisite to running an EOI campaign - however the company must intend converting to access this service.