Crowd Sourced Funding launches 19 October 2018

Crowd Sourced Funding Equity Raising for small proprietary companies is now available in Australia without requiring a proprietary company to convert to an unlisted public company.

The UK, Europe, USA, Canada and New Zealand have been allowing their private companies to utilise crowd source funding equity raising for around six years. Australia has now caught up.

This is great news for company directors and shareholders of small medium enterprises who would like to expand their businesses, achieve new heights and achieve their dreams.

Eligible companies will have group annual turnover of less than $25 million and will have group assets valued at less than $25 million and will not be listed on a stock exchange or a financial market anywhere in the world.

There is no stipulated age requirement to raise crowd sourced funding equity raising nor is there any specified industry classification to be able to utilise crowd sourced funding equity raising.

Eligible companies will be able to raise up to $5 million during a twelve month period from the public – if the public is prepared to support the company and its capital raising activities.

The first thing to identify will be whether your company is likely to fit one of the characteristics of companies that might be interested in trying to raise crowd sourced funding equity raising. We have identified eight characteristics including:

A fast-growing ambitious business
A business that wants to expand
A company that wishes to acquire other businesses
A company with a “big audacious idea” that could be successful but the directors need to ensure that a Business Plan, Budget and Cash Flow Forecast is prepared for the audacious idea and that the deal stacks up
The company may have large debts financed on other people’s assets. The benefactor may require the title deed back – the company could consider raising capital to pay out the loan, return the title deed and save interest payments and any “tension” from utilising someone else’s asset to borrow funds for a business can cause.
The company may have a succession issue because the founder has reinvested all of the profits back into the business over the years with the very little been contributed to a superannuation fund. However, the strategy could be to encourage a child or other family member to take over the business but there are insufficient funds available to give the founder access to money.
The company may have developed new products, processes or services but is unable to present itself as a company that might be able to raise capital as an ESIC because of the company’s age, expenditure or income. In this case raising capital as a funding company could be a solution.
A company with a CEO who has an exciting vision and the determination to implement that vision.

There could be other key characteristics making companies attractive candidates to be able to raise crowd sourced funding equity raising. Most will require advice from an accountant familiar with all aspects of the crowd sourced funding equity raising process.

The opportunity to raise capital as a small proprietary company commences 19 October 2018. Call Flor-Hanly Accountants in Mackay on 07 4963 4800 to find out more.

Crowd Sourced Funding launches