Government coy on crowd-sourced preference

The Australian government yesterday outlined three options to promote crowd-sourced equity funding, giving some impetus to at least one of the priorities in the recent Murray report.

The first option embraces a model based on work by the Corporations and Markets Advisory Committee. This recommended the development of a separate legislative framework for crowd-sourced equity funding.

CAMAC favoured watering down requirements for public companies to appoint an auditor, have their financial statements audited and hold annual general meetings, and prepare extensive disclosure documents.

A second option follows the New Zealand model in force since April 2014. Similar to the CAMAC model, the New Zealand model has the benefits of placing the intermediary at the centre of the model as a gatekeeper and keeping pace with international developments.

The third option is the status quo, with no change to the current requirements under the Corporations Act. Under this option, crowd-sourced equity funding would not be regulated as a specific form of investment. Small businesses and startups seeking to raise early stage capital would need to comply with existing requirements.

The public consultation process lasts till the 6th of February 2015.