April 25, 2017

April 25, 2017

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April 24, 2017

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Looking to Raise capital Under New Australian Crowd Sourced Funding Regime? PART 2

While the Australian Crowd Sourced Funding regime removes some of the existing regulatory barriers to capital raising, there are a number of other key considerations for eligible companies intending to utilise the CSF regime. Below are just a few:

  • CSF intermediary platform requirements: Offers for a company’s securities must be made through an authorised CSF intermediary. At this point in time and apart from service fees, it is unclear whether a CSF intermediary will impose any other obligations on the company to be admitted onto their platform (e.g. due diligence, verification and CSF offer document sign off obligations).

  • Disclosure requirements: The CSF offer document must contain certain information required by the regulations which are yet to be released.

  • Liability: The Company and its individual directors and officers may be held liable for loss or damage suffered by a person due to a defective CSF offer document. Accordingly, it is important that you have a reasonable objective basis for the contents of the CSF offer document. In particular, you will need to be careful when providing financial forecasts and statements regarding future events.

  • Restrictions on advertising: There will be restrictions on advertising for the CSF offer.

  • How do you value your business: In practice, you will need to determine a pre-money valuation for your company to set an appropriate offer issue price.

  • Setting a minimum size for investment: While there is a maximum investment cap of $10,000 per investor per offer, to avoid having many shareholders with small parcels and the associated administrative burden, you may want to consider setting a minimum subscription amount.

  • Share buy-back mechanisms: Where certain requirements are met, companies utilising the CSF regime will be exempt from meeting higher corporate governance and reporting requirements applicable to public companies for a period of 5 years (e.g. annual audit and filing of financial statements). At the expiry of the 5 year period, the company may want to ensure that it has in place effective mechanisms to allow it to convert back to a proprietary company should the need arise (e.g. consider including share buy-back, share valuation mechanisms in the company’s constitutional documents).

Part 1: Whats is the New Australian Crowd Sourced Funding Regime?

Part 3: Looking to Become Crowd Sourced Funding Intermediary Under New Australian CSF Regime? 

Copyright 2017 K & L Gates

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About this Author

Rania Seoud, KL Gates, Finance Transactions Lawyer, public capital markets attorney
Senior Associate

Ms. Seoud is a corporate and transactional lawyer with a focus on equity capital markets.

Ms. Seoud has experience in public capital markets, including initial public offerings (IPO) on the Australian Securities Exchange (ASX), rights issues, corporate governance, placements, corporate restructures, funds management, takeovers, mergers and general corporate law and ASX listing rule compliance advice. She also advises on private equity transactions for unlisted companies including mergers and acquisitions and private capital raisings, as well as...

61-3-9640-4209
Andrew Gaffney, KL Gates, Australia, Capital Funds Raising Lawyer, initial public offerings attorney
Partner

Mr. Gaffney has extensive experience in advising corporate clients on capital markets including initial public offerings (IPOs) on the Australian Securities Exchange (ASX), other capital raisings for listed companies and takeovers/mergers. He also advises on private equity transactions for unlisted companies (including mergers and acquisitions, private capital raisings, venture and seed capital, other hybrid security arrangements and shareholder agreements), as well as compliance and regulatory issues under the Australian Corporations Act and ASX Listing Rules. 

He has a practical knowledge of international and local considerations in international cross border transactions having also practiced law in London for a number of years. In his practice Mr. Gaffney advises many clients in the technology and life sciences sectors (including start up and established technology / biotechnology companies).

61-3-9640-4329
Daniel Knight, KL Gates, financial services industry lawyer, retail fund managers attorney
Senior Associate

Mr. Knight is a commercial and regulatory lawyer with a focus on the financial services industry. He advises a range of wholesale and retail fund managers, banks, financial advisers, superannuation fund trustees and other financial services firms.

Mr. Knight concentrates on commercial transactions in the industry and on advising clients about Australian licensing, disclosure, and compliance obligations. He regularly advises international fund managers about offering their products in Australia.

Mr. Knight also has...

61-3-9640-4324