Crowd Sourced Funding Equity Raising Requirements

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Welcome to this update on ESS BIZTOOLS ADVISORY SERVICES NEWS.

CROWD SOURCED FUNDING EQUITY RAISING REQUIREMENTS

Question: This client has told me that he wants to raise $3 Million from the public via his private company.  I told him that he cannot raise that much, however he was adamant that it is possible. Is this true?

Answer: a private company and an unlisted private company can raise up to $5 Million as a Crowd Sourced Funding Equity Raising status company, if they have complied with the legislation rules.

A company is required to submit a Crowd Sourced Funding Offer Document to a Crowd Sourced Funding Intermediary, appointed by ASIC.  If approved by the Intermediary, the company could raise a maximum of $5 Million in a twelve-month period.  An approved company can repeat the process in future years, subject to receiving the approval from an ASIC Appointed Intermediary, and the public being willing to invest in the company.

The company must have an international turnover of less than AU$25 Million and a gross value of assets for the group of less than $25 Million.

Since the Crowd Sourced Funding Equity Raising legislation was enacted about seven years ago, approximately $400 Million has been raised by companies, the majority of which are private companies.

For companies to utilise the capital raising process, the companies will need:

• Financial accounts for the previous financial year.
• Interim financial accounts for the current year.
• Business Plan that clearly identifies the directors’ vision for the company.
• Predictive Financial Accounts: Budgets, Key Drivers, Cash Flow Forecast, Projected Balance Sheets.

The Directors and Leadership Team should have a clear understanding of the legal requirements relative to raising capital this way, as well as an appreciation of the duties, responsibilities and powers of the ASIC appointed Crowd Sourced Funding Intermediaries.

ESS BIZTOOLS has developed a complete product package to assist Accountants and Bookkeepers to offer advice to companies who are interested in raising capital as a Crowd Sourced Funding Equity Raising company.  To find out more, visit our website – www.essbiztools.com.au.

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