In brief

On 29 September 2017, the new crowd-sourced funding (CSF) regime came into force. ASIC has released guidance (RG261 and 262) to assist companies and proposed licensed CSF intermediaries in using the new regime.

ASIC Commissioner John Price said:

Crowd-sourced funding provides an opportunity for small to medium-sized businesses to access an alternate source of capital without the regulatory burden of traditional fundraising. ASIC’s new guidance will help public companies and crowd-funding platform operators comply with their obligations under the CSF regime, while supporting investor confidence.”

The CSF regime brings Australia into line with similar regimes in other countries such as New Zealand, United Kingdom and Canada.

What companies seeking capital need to know

  • The CSF regime contained in new Part 6D.3A of the Corporations Act aims to facilitate flexible and low-cost access to capital for companies by reducing the regulatory compliance for making public offers, while still ensuring adequate protections for retail investors. The regime applies to unlisted public companies, but legislation is currently before Parliament to extend it to proprietary companies.
  • Eligible companies with less than $25 million in assets and annual revenue can raise up to $5 million in any 12-month period by offering ordinary shares to retail investors.
  • Retail investors have an investment cap of $10,000 per company in any 12-month period with a five-day cooling-off period.
  • A CSF offer must be made through a CSF intermediary who holds an Australian Financial Services Licence (AFSL) with CSF authorisation.
  • Newly created or converted public companies making CSF offers will not have to comply (for up to five years) with certain reporting, audit and AGM obligations that would usually apply to public companies.

What a proposed CSF intermediary needs to know

  • A CSF intermediary operates a platform (like a gatekeeper) through which retail investors invest and companies offer their shares.
  • A CSF intermediary is an AFS licensee with specific CSF authorisation. It has significant obligations and responsibilities including under the general AFSL obligations.
  • Unique to the CSF regime, the CSF intermediary gatekeeper obligations include, for example:
    • checking a prospective offering company, its directors, CSF offer and offer document;
    • checking investors, including assessing whether an investor is a retail client; and
    • refraining from publishing, or continuing to publish, a CSF offer document on its platform in certain circumstances.

CSF authorisation applications

ASIC is now accepting applications from potential CSF intermediaries via the existing ASIC electronic ‘eLicensing’ portal. ASIC says its Licensing team will aim to consider applications from prospective CSF intermediaries as a matter of priority.

Madgwicks can assist prospective CSF intermediaries seeking to provide a crowd-funding service, particularly in relation to satisfying the unique gatekeeper obligations for operating platforms for CSF offers.


The CSF regime may well be of interest to smaller start-up companies seeking to raise equity capital quickly and cost effectively. The regime will be further enhanced once it is extended to proprietary companies (expected once an amendment currently before Parliament is passed).

Existing AFS licensees may be interested in enhancing their AFSL to become a CSF intermediary or you may be seeking to obtain a CSF authorisation from scratch.

About the Author

Rick Goldberg

Rick is a highly experienced corporate and commercial lawyer, with particular expertise in financial services, managed funds and superannuation.

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