The Australian Government is introducing proposed new crowd funding and equity funding legislation for small companies looking to raise from mum and dad investors.
Current Australian regulations limited the scope of equity crowd based funding to wholesale or sophisticated investors who earn at least $250,000 a year or have $2.5 million in assets, the new regulations would allow public companies with $5 million or less in annual turnover, or up to $5 million in assets, to raise $5 million a year from retail, also known as ‘mum and dad’ investors.
With the new bill, an amendment to the Corporations Act, unlisted public companies with less than $25 million in annual turnover and less than $25 million in gross assets to raise via equity crowdfunding platforms. Companies will be able to raise up to $5 million in a 12 month period.
As proposed in the previous bill, retail investors will be able to invest up to $10,000 per company in a 12-month period, with the cooling off period during which they can change their mind now down to 48 hours.
This effectively proposes relief for small companies which previously needed to undertake fairly arduous public company reporting just to contemplate crowd funding.
You can see the full Corporations Amendment Crowd Funding Bill 2016 here.