Is Crowd Sourced Funding Equity Raising the Same as Crowdfunding?

Accountant's Minute 198

  • Crowd Sourced Funding Equity Raising is not the same as “Crowdfunding”.
  • Crowd Sourced Funding Equity Raising is governed by the Australian Government’s “Corporations Act” which specifies strict legal requirements for the company to abide by.
  • The company has to appoint an Intermediary from the businesses which have been appointed Crowd Sourced Funding Intermediaries by ASIC.
  • The company has to produce a Crowd Sourced Funding Offer Document (similar to a Prospectus) which contains significant amounts of information.
  • “Crowdfunding” is a popular term given to people or organisations raising money for particular needs or events.
  • “Crowdfunding” has virtually no government control or legislation covering its activities.
  • Common uses for “Crowdfunding” include:
  • raising money to assist a family with funeral expenses;
  • raising money to assist someone who has been injured in an accident;
  • raising money for an inventor who wants to raise a sum of money to finish a project. Sometimes the inventor offers the “crowd” sample products;
  • an employee raising money to pay for legal expenses incurred in a dispute with an employer.
  • There is no formal requirement on reporting the amount of money raised or the expenditure of that money within “Crowdfunding”.
  • A company cannot utilise “Crowdfunding” to raise share capital for the company.

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Peter Towers

Accompanying File:

Is CSFER the same as Crowdfunding [2019] (AM198).pptx

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