After many years of consultation, crowdsourced equity funding (CSF) in Australia is off to a flying start in 2018 with the Australian Securities and Investments Commission (ASIC) granting licences to seven CSF intermediaries to allow them to operate a CSF platform.
The Corporations Amendment (Crowd-sourced Funding) Act 2017 (CSF Act) came into effect on 29 September 2017, permitting eligible Australian public companies to raise funds using CSF (see our previous article here). However, a CSF offer is only able to be made through a ‘CSF intermediary’ - a financial services licensee who is expressly authorised to provide a crowd funding service and, at the time of the CSF Act commencing, ASIC had not granted any Australian Financial Services Licences (AFSL) to operate a CSF platform.
ASIC has now issued the first licences to CSF intermediaries under the CSF regime. Several companies have been issued with AFSL authorisations to act as intermediaries, and are now able to operate a crowd-sourced funding service. These new licencees will be able to create and offer online platforms from which eligible public companies will be able to make CSF offers to investors. The initial licences were issued to Big Start, Billfolda, Birchal Financial Services, Equitise, Global Funding Partners, IQX Investment Services and On-Market Bookbuilds on 11 January with the first CSF raisings commencing shortly after that. Xinja Holdings Limited (which is building what it hopes to be Australia’s first 100% digital bank), has been one of the first companies to kick off a CSF offer utilising the Equitise platform. Already, Xinja have investments of $1.2 million from the offer, which was seeking to raise between $500,000 to $3,000,000 with the offer scheduled to close in March.
At this stage, only public companies are able to participate in CSF offers in Australia. The Federal Government has released draft legislation that, if passed, will extend the CSF regime to proprietary companies (you can see our previous article here). If passed, the CSF regime will not be available to proprietary companies until August 2018 at the earliest.
With various CSF platforms having now been licenced, we anticipate a number of public companies will be undertaking CSF raisings in 2018. We look forward to seeing further equity crowd funding licences being issued.