Yesterday ASIC issued the first seven Australian Financial Services licences to equity crowdfunding intermediaries. What this means is that public unlisted companies can finally launch an equity crowdfunding campaign on any one of the licensed intermediary platforms.
It's been a long road for equity crowdfunding. After being knocked back a couple times in Parliament the legislation finally passed in March last year, but didn't come into effect until September, and was unusable until intermediaries were issued licences.
Intermediaries play a crucial role in equity crowdfunding. They act as a gatekeeper between start-ups and investors. In addition to operating the crowdfunding platform, intermediaries are required to:
- perform checks on the offering company, its directors and the offer document;
- perform checks on investors, including assessing whether an investor is a retail client, and holds investor money on trust.
So what is next?
Now that licences have been issued, public unlisted companies can finally launch their campaigns!
If you are a proprietary limited company and want to crowdfund, you have two options, either convert to a public company or wait for the proprietary crowdfunding legislation to pass through parliament. Our guess is that the proprietary legislation will pass in the coming months and come into effect later in the year.
Let the games begin.