Equity crowdsource funding may finally become a thing. In March, the Government created a framework for public companies to use it. Now, last week's budget came with a little gift to private companies in the form of the Corporations Amendment (Crowdsourced Funding for Proprietary Companies) Bill 2017.

So now that private companies can join the party, what does it mean?

Eligibility: Proprietary companies who want to crowdfund must have at least 2 Australian based directors and must lodge annual financial and directors' reports (which must be audited if the offer exceeds $1million).

Shareholder limit: The Bill also allows shareholders who hold shares by way of a crowd sourced raise to go uncounted toward the 50member limit. It's not clear how this will work when crowd sourced shareholders transfer their shares, but hopefully that will get ironed out in the consultation.

Takeovers and related parties: Participating companies will be exempt from the takeovers provisions so long as they incorporate new exit arrangements into their constitutions (the new arrangements essentially just lift the takeover threshold from 20% to 40%). Proprietary companies who crowd fund will also be caught by the related party provisions of the Corporations Act, an investor protection usually reserved for public companies.

Governance: In addition to supplementary information on company registers, companies looking to participate will need to give their constitution a makeover as well as lodging it with ASIC.

Despite giving the crowd what it asked for, we think the shareholder limit and corporate governance compliance will make it difficult for proprietary companies. We also aren't sure how the public crowdsource funding requirements interact with these new changes and whether private companies will also be required to pass the same asset test that public companies do. However, this is a start of a win.