The federal government has announced it will introduce crowd source equity and debt funding legislation before the end of the calendar year to allow more individual retail investors, such as SMSF trustees, greater opportunities to participate in financing and expanding Australian businesses.
Speaking at a BT/Financial Services Council Political Series breakfast in Sydney, Assistant Treasurer Kelly O’Dwyer said: “Right now in Australia start-ups and small businesses cannot practically access retail investors due to significant upfront and ongoing compliance costs and red tape.
“Changing this will unlock growth and unlock innovation.”
O’Dwyer said the government’s crowdfunding efforts would focus on Australian public companies with annual turnover and gross assets under $5 million.
“While the US model caps the maximum funds that an issuer my raise to $1 million in any 12-month period, our crowd source equity funding model will be capped at $5 million,” she said.
“This means that the founders of the microbrewery in Tasmania can get their business off the ground with the investment of mums and dads in places like Albury and Sydney.”
The Assistant Treasurer emphasised appropriate consumer protection mechanisms needed to be included in the initiative.
“[This means] including the licensing of intermediaries, risk warnings to investors, and a five-day cooling-off period for the investment,” she said.
More industry consultation would be conducted before the final legislation was formulated and tabled, she said.