Reading time: 2 minutes

Treasury has just released a Consultation Paper on the Government’s crowd-sourced equity funding (CSEF) framework for public companies. It asks for submissions on whether the CSEF framework should be extended to small proprietary companies. We are in favour of this!

We consider that the reforms are great news for small business. Why? The CSEF proposals aim to make it more flexible, quicker and easier for small companies to raise capital, with lower compliance costs. We assist many strong small businesses who would thrive with investment. We will keep you up to date  when the  draft CSEF legislation is released. The key points in the consultation paper are as follows:

Who can raise funds?

Public companies seeking to use CSEF need to have annual turnover and gross assets of less than $5 million.

What disclosure is required?

Public companies need to give potential investors a CSEF disclosure document. Clear guidance on disclosure is important to help companies understand what disclosure is required, to help investors get consistent information about companies, and to help outline the risks to investors. The CSEF disclosure document should be less detailed and therefore less time-consuming and expensive than a public offering disclosure document.

How much can be raised?

Public companies making a CSEF offer can raise up to $5 million in 12 months. This is an increase from the current small-scale offering exemption of $2 million in 12 months from non-wholesale investors. The $5 million cap includes capital raised under the current small-scale offerings exception e.g. family and friends, but does not include capital raised in other situations where a disclosure document is not required e.g. from sophisticated investors.

What type of shares can be issued?

There is a limit of one class of fully paid ordinary shares per CSEF round, and these shares must have equal price, terms and conditions.

What about compliance costs?

There are exemptions, aimed at reducing the cost of compliance for CSEF offers.

Next steps

Are you considering capital raising? Please contact LegalVision today to discuss. We have assisted companies with both private and public capital raising and we can discuss the new crowd-funding rules with you.

Webinars

How Franchisors Can Avoid Misleading and Deceptive Conduct

Wednesday 18 May | 11:00 - 11:45am

Online
Ensure your franchise is not accused of misleading and deceptive conduct. Register for our free webinar today.
Register Now

New Kid on the Blockchain: Understanding the Proposed Laws for Crypto, NFT and Blockchain Projects

Wednesday 25 May | 10:00 - 10:45am

Online
If you operate in the crypto space, ensure you understand the Federal Government’s proposed licensing and regulation changes. Register today for our free webinar.
Register Now

How to Expand Your Business Into a Franchise

Thursday 26 May | 11:00 - 11:45am

Online
Drive rapid growth in your business by turning it into a franchise. To learn how, join our free webinar. Register today.
Register Now

Day in Court: What Happens When Your Business Goes to Court

Thursday 2 June | 11:00 - 11:45am

Online
If your business is going to court, then you need to understand the process. Our free webinar will explain.
Register Now

How to Manage a Construction Dispute

Thursday 9 June | 11:00 - 11:45am

Online
Protect your construction firm from disputes. To understand how, join our free webinar.
Register Now

Startup Financing: Venture Debt 101

Thursday 23 June | 11:00 - 11:45am

Online
Learn how venture debt can help take your startup to the next level. Register for our free webinar today.
Register Now

About LegalVision: LegalVision is a commercial law firm that provides businesses with affordable and ongoing legal assistance through our industry-first membership.

By becoming a member, you'll have an experienced legal team ready to answer your questions, draft and review your contracts, and resolve your disputes. All the legal assistance your business needs, for a low monthly fee.

Learn more about our membership

Need Legal Help? Submit an Enquiry

If you would like to get in touch with our team and learn more about how our membership can help your business, fill out the form below.

Our Awards

  • 2020 Innovation Award 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice Award 2020 Employer of Choice Winner – Australasian Lawyer
  • 2020 Financial Times Award 2021 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review
  • 2021 Law Firm of the Year Award 2021 Law Firm of the Year - Australasian Law Awards
  • 2019 Most Innovative Firm - Australasian Lawyer