On Thursday (13 September), the Senate passed the Corporations Amendment (Crowdsourced Funding for Proprietary Companies) Bill 2017, with the legislation expected to be operational in October, 28 days after receiving royal assent.
The change will allow private companies with less than $25 million in assets and turnover to utilise crowdsourced funding to raise up to $5 million a year.
BDO partner Sharon Houghton said that the passage of the legislation would be welcome news for start-ups and small businesses who might otherwise struggle to obtain finance.
“This is good news for thousands of Australian private businesses that will now have the ability to crowdsource up to $5 million a year from retail investors, capped at $10,000 per retail investor, in return for equity in their company,” Ms Houghton said.
“The government has previously been criticised for the long and staggered release of this legislation, which was initially introduced in November 2016. However, yesterday was a welcome development to the budding industry.
“[We’re] excited to see new capital avenues becoming available for Australian companies and will be interested to see the market’s response to the increased accessibility of crowdfunding that comes into effect in late October this year.”
ESS BIZTOOLS managing director Peter Towers believes the passage of the legislation will open up new revenue streams for accountants.
“Accountancy firms will be able to stay ahead of the game and create new income streams by offering professional advice to SME companies that wish to take advantage of the amendments,” said Mr Towers.
“This is a tremendous opportunity for accountants to guide clients and prospects on the processes that are required, if the private company is going to be able to qualify as a crowdsourced funding company.”
Jotham Lian is the news editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.