What’s the deal with equity crowdfunding, and should I do it?

What’s changed?

The updated legislation passed on September 12, including an amendment from Labor which means it will come into effect in 28 days.

Equity crowdfunding will now be available to private companies, but there are still some restrictions.

Companies must have less than $25 million in turnover and gross assets, and funds raised will be restricted to $5 million each year.

Startups using the method will also be subject to transaction rules and stringent reporting and disclosure obligations, with annual reports and directors’ reports required. Once companies raise $3 million or more, they will also be subject to auditing requirements.

Matt Vitale, co-founder of equity crowdfunding platform Birchal, tells StartupSmart the need to convert to become an unlisted public company was “a significant deterrent to a lot of businesses”.

However, there were concessions applied to those converted businesses that will no longer apply.

“Anyone that wanted to use the equity crowdfunding regime as a public company and rely on the concessions will need to incorporate a public company before the legislation commences,” he says.

To read more, please click on the link below…

Source: StartupSmart explainer: What’s the deal with equity crowdfunding, and should I do it? – SmartCompany