The very short answer is “yes”, provisions should be made to accommodate CSEF.
Co-ordinating small increments of investments by large numbers of people is a way to unlock economic activity that currently is “locked up” by well-intentioned existing legislation.
This is why other countries have adopted the CSEF ideas and provided “air-space” and legal clarification for this emerging industry.
The public company model, or provisions made for entities like ASSOB are too onerous on a seed company and many early stage companies.
The Private company model is not appropriate either because of non-employee shareholder caps and the sheer volume of shareholders on the register that would discourage later-stage Angels or VC’s that might normally support a second round and beyond in the life of a private company. Other provisions like the 20/12 and solicitation rules compound the issues for changing the private company rules.
The Managed Investment Scheme for pooling multiple shareholders suffers from being too onerous for seed-stage businesses and is akin to Public Company compliance. These schemes may also engage in employment and make commercial contracts. In the context of CSEF any entity that “pooled” or aggregated the crowd into an entity for the purpose of taking the crowds’ stake in the share register, would sensibly be restricted to the status of a holding company and should not be able to employ or participate in commercial contracts. Managed Investment Scheme legislation is in appropriate in the CSEF context.
For seed-stage and early-stage funding, where you find CSEF most at home, then small increments of funding by large numbers of people is an idea who’s time has come.
Protecting Investors and Issuers is best achieved through CSEF market-makers – in other words, Intermediaries.
These Intermediaries need amended and clear legislation to work within. The current legislative hurdles would make most of the likely uses of CSEF cost-prohibitive.
The market-led desire for CSEF, is demonstrated locally by the growth of rewards-based platform: Pozible.
The desire to engage in financial instruments similar to what CSEF would allow, can be seen in the debt products already made available through Peer2Peer schemes like Society One, i-Grin and Lendinghub.
Globally the implementation of CSEF by our economic peers – the US, UK, Canada and NZ – should encourage CSEF legislators in Australia. This CSEF funding model will happen within the economies of major trading partners, even if it doesn’t happen here in Australia.
This market is in its infancy, but potentially is huge. Australia is not leading the way in this crowdfunding market and really has to play catch up.
There are benefits Australia will miss out on by not having CSEF.
The most obvious is the “brain drain” that is likely from within our Australian hi-tech, start-up community. It is common for software businesses to sell online and operate internationally from inception. Any entrepreneur considering a venture in this space would be encouraged to legislative environments that easily facilitated CSEF investment in their seedling of an idea.
This potentially makes the start-up scene of New Zealand more attractive than that of Australia. Let alone the start-up scene of Asian, US and UK jurisdictions that are already benefiting from CSEF legislation.
Equally compelling as the “brain drain” risk is the “building resilient local economies” opportunity.
CSEF could potentially offer local communities a vehicle for pooling investment in shared local infrastructure. Specifically in projects where being local has economic advantages, namely; Energy, Food, Water, Waste and Education projects. These are cheaper to produce closer to consumption.
Were CSEF legislation drafted with this stakeholder group in mind then there are many local community groups looking to co-fund and then consume these “essential services” locally. This would provide local benefits, but at its core is a cost-saving – and that is motivation enough.
The very short answer is “yes”, provisions should be made to accommodate CSEF.
Co-ordinating small increments of investments by large numbers of people is a way to unlock economic activity that currently is “locked up” by well-intentioned existing legislation.
This is why other countries have adopted the CSEF ideas and provided “air-space” and legal clarification for this emerging industry.
The public company model, or provisions made for entities like ASSOB are too onerous on a seed company and many early stage companies.
The Private company model is not appropriate either because of non-employee shareholder caps and the sheer volume of shareholders on the register that would discourage later-stage Angels or VC’s that might normally support a second round and beyond in the life of a private company. Other provisions like the 20/12 and solicitation rules compound the issues for changing the private company rules.
The Managed Investment Scheme for pooling multiple shareholders suffers from being too onerous for seed-stage businesses and is akin to Public Company compliance. These schemes may also engage in employment and make commercial contracts. In the context of CSEF any entity that “pooled” or aggregated the crowd into an entity for the purpose of taking the crowds’ stake in the share register, would sensibly be restricted to the status of a holding company and should not be able to employ or participate in commercial contracts. Managed Investment Scheme legislation is in appropriate in the CSEF context.
For seed-stage and early-stage funding, where you find CSEF most at home, then small increments of funding by large numbers of people is an idea who’s time has come.
Protecting Investors and Issuers is best achieved through CSEF market-makers – in other words, Intermediaries.
These Intermediaries need amended and clear legislation to work within. The current legislative hurdles would make most of the likely uses of CSEF cost-prohibitive.
The market-led desire for CSEF, is demonstrated locally by the growth of rewards-based platform: Pozible.
The desire to engage in financial instruments similar to what CSEF would allow, can be seen in the debt products already made available through Peer2Peer schemes like Society One, i-Grin and Lendinghub.
Globally the implementation of CSEF by our economic peers – the US, UK, Canada and NZ – should encourage CSEF legislators in Australia. This CSEF funding model will happen within the economies of major trading partners, even if it doesn’t happen here in Australia.
This market is in its infancy, but potentially is huge. Australia is not leading the way in this crowdfunding market and really has to play catch up.
There are benefits Australia will miss out on by not having CSEF.
The most obvious is the “brain drain” that is likely from within our Australian hi-tech, start-up community. It is common for software businesses to sell online and operate internationally from inception. Any entrepreneur considering a venture in this space would be encouraged to legislative environments that easily facilitated CSEF investment in their seedling of an idea.
This potentially makes the start-up scene of New Zealand more attractive than that of Australia. Let alone the start-up scene of Asian, US and UK jurisdictions that are already benefiting from CSEF legislation.
Equally compelling as the “brain drain” risk is the “building resilient local economies” opportunity.
CSEF could potentially offer local communities a vehicle for pooling investment in shared local infrastructure. Specifically in projects where being local has economic advantages, namely; Energy, Food, Water, Waste and Education projects. These are cheaper to produce closer to consumption.
Were CSEF legislation drafted with this stakeholder group in mind then there are many local community groups looking to co-fund and then consume these “essential services” locally. This would provide local benefits, but at its core is a cost-saving – and that is motivation enough.