The peak body for Australia’s fintech industry today welcomed the approval of new equity crowd-sourcing laws and confirmed the changes would provide a major new avenue to allow companies to grow and create jobs.
FinTech Australia welcomed the Australian Senate’s decision to endorse the Corporations Amendment (Crowd-Sourced Funding) Bill 2016.
“This new legislation represents an important step to open up early-stage capital markets, which will ultimately help businesses to grow and therefore create new employment opportunities,” said FinTech Australia CEO Danielle Szetho.
“It also represents a substantial step forward in making the Australian regulatory environment internationally competitive, given concerns that Australia is falling behind the rest of the world when it comes to equity crowdfunding (ECF).
“Our members can confirm that there is strong pent-up demand from Australia’s investment community to utilise the provisions in this legislation.
“Also, some of the companies interested in taking advantage of equity crowdfunding are family run enterprises, so this doesn’t just benefit the startup community, it’s about everyday mum-and-dad SMEs as well.”
Ms Szetho said FinTech Australia now looked forward to working with Australian Government regulators to extend the ECF provisions from unlisted public companies (as covered by this legislation) to private companies.
“The passing of this legislation will assist the government, industry and companies to better understand the dynamics of the ECF market in Australia, while preparing broader legislative change for private companies,” Ms Szetho said.
Jonny Wilkinson, co-founder of FinTech Australia member Equitise, said he was aware of more than 20 companies who had been eagerly awaiting the passage of this legislation, so they could use it to raise funds.
“Traditionally, Australia has had an under-developed venture capital market which has led to companies having an over-reliance upon the Australian Stock Exchange (ASX) to access capital, or relocating their companies overseas,” he said.
“There is a significant cost to listing on the ASX, in both time and money, with recent changes to minimum listing requirements on the ASX making it even more difficult for early stage high growth businesses to list.
“ECF is essential to help filling the gap left as an essential tool in early stage capital markets.
“I have met a number of companies who have already converted to an unlisted public company in order to use this legislation to access funding and grow their shareholder base beyond 50 non-employee shareholders.
“There are many more who are willing to convert in anticipation of the passing of this legislation.”
Jack Quigley, founder of another FinTech Australia member CrowdFundUP, also welcomed the passage of the legislation.
“The importance of legislation to support equity crowd-funding was something identified as important by FinTech Australia in its formative period in late 2015,” he said.
“Unfortunately, it’s been a 15-month marathon to get this legislation across the line but nevertheless we are excited that it is now in place.
“While there are a few further changes we would like to see to the legislation, including extension to proprietary companies, it is important that it is enacted quickly and continually monitored.”