Govt backs crowd-sourced equity funding

THE Federal Government has come out in support of new crowd funding systems that help business development and is formalising rules around the process, including how the system if viewed from an equity and taxation standpoint.

The government is releasing a discussion paper on the characteristics of regulatory frameworks to facilitate crowd-sourced equity funding, including the model put forward by the Corporations and Markets Advisory Committee in a report released in June 2014 and a model similar to that recently implemented by New Zealand. 

“Crowd-sourced equity funding is an innovative type of online fundraising that allows a large number of investors to make small equity investments in a company,” said Federal Finance Minister, Mathias Cormann.

“The development of crowd-sourced equity funding has the potential to increase the funding options available to entrepreneurs to assist in the development of their businesses and contribute to the development of a more dynamic, competitive Australian economy.

“We are keen to ensure that any crowd-sourced equity funding model appropriately balances supporting investment, reducing compliance costs – including for small business – and maintaining an appropriate level of investor protection,” Mr Cormann said.

“Small business and entrepreneurs are a crucial driver of productivity and economic growth.  The release of the discussion paper progresses our election commitment to improve small businesses’ access to affordable finance.”

Mr Cormann said the government was “committed to creating the right conditions to drive economic growth, support innovation and create jobs by improving Australia’s competitiveness”. 

The recently released Industry Innovation and Competitiveness Agenda called for consultation on a potential regulatory framework for crowd-sourced equity funding. 

The discussion paper is now available for comment on the Treasury website (www.treasury.gov.au ). 

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