New Crowdfunding Laws, Yay For Small Business Or Nay?

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Business leaders are lukewarm over the Turnbull Government’s new crowdfunding Bill which has passed the House of Representatives, with some saying it’s a first step for small business and startups but others saying it falls dramatically short. The Government’s crowd-sourced equity funding (CSEF) Bill is designed to help startups and small businesses have greater access to equity funding. It allows anyone to buy equity in a company — so they own a piece of it and can share in its financial success — so mum and dad investors would be able to spend $10,000 within a 12-month period in a startup that has less than $5 million in assets and has less than $5 million in annual turnover.

But there’s a catch: the startups must be unlisted public companies — a structure that allows them to sell shares but not list them on the stock exchange — as opposed to private firms, which most startups are.

Minister for Small Business and Assistant Treasurer, Kelly O’Dwyer said the Bill was a win-win for investors and small business.

“The intent of this Bill is to assist start-ups and other small businesses that may have difficulty accessing equity funding due to the costs of disclosure and other requirements, while protecting mum and dad investors,” she said.

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