Crowdfunding – equity based
The Treasurer announced on Monday 21 March, that the Federal Government is actively considering the following changes to Australia’s equity-based crowdfunding regime:
- increasing the capital raising thresholds (currently fixed at $5 million in any 12 month period)
- reducing the cooling off period for investors
- permitting intermediaries and platform operators to cancel an investment for legitimate reasons
- reducing the $5 million asset and turnover test applicable to issuers.
These reforms would have the effect of significantly expanding the scope of Australia’s equity-based crowdfunding regime.
Crowdfunding – debt-based
Relevant to debt-based crowdfunding, ASIC also issued on Monday 21 March 2016, an important guidance on ‘peer-to-peer’ lending or market place lending platforms.
Peer-to-peer lending or market place lending platforms are often conducted under the guise of debt-based crowdfunding, and are typically structured as unregistered managed investment schemes or an arrangement through which retail or wholesale investors invest money, which is then lent to borrowers.
Market place lending arrangements commonly involve the use of an online platform, such as a website, on which loan requests can be made. Loan requests are then matched against offers to invest. Investors either select the loans they wish to invest in or they are marked with loans that meet specified criteria.
Peer-to-peer lending: key issues addressed in the ASIC guidance
Click here to view table.