Governments focusing on fintech to create or change regulation and stimulate growth are increasingly turning towards crowdfunding as a fast-growing segment of alternative finance. Last week, the Australian government made a second attempt to introduce crowdfunding-specific legislation, after being deferred by the Senate earlier this year.
The first attempt failed after senators claimed that the Senate committee in charge of compiling the legislation had unfairly dismissed stakeholders’ concerns. The new bill has a few amendments from the original legislation, including expanding the size of the unlisted public companies that can access this type of funding from only those with less than $5 million in assets, to $25 million. If the legislation is passed, these small businesses will be able to raise up to $5 million in any 12-month period through crowdfunding platforms.
In addition, small businesses that decide to become public companies to take advantage of the new crowdsourced equity funding framework will be granted an exemption from certain corporate governance and reporting obligations for up to five year. Treasurer Scott Morrison said the bill is a commitment to back small and startup businesses help transition the Australian economy from the mining and investment boom to a more resilient and diversified economy that delivers jobs and growth to all Australians. He further added,
The legislation will complement the Turnbull government’s existing financial sector and innovation policies, including the push for an internationally competitive fintech industry, new tax incentives for angel investors and start-ups and changes to the tax treatment of crypto currencies.
Jonny Wilkinson, the co-founder of online equity crowdfunding platform Equitise which has been involved in the government’s consultation process on the new legislation, said these laws were just a beginning and added,
The industry continues to work closely with the government and Treasury to implement the most effective framework for private [proprietary] companies to be able to access capital through equity crowdfunding.