Equity crowdfunding gets the green light

An alternative way to invest has finally been legalised in Australia. The Corporations Amendment (Crowd

Sourced Funding) Bill (2016) has passed through the senate, meaning that investors can now participate in equity crowdfunding.

Until recently, crowdfunding only allowed them to receive a product or service in exchange for a contribution. But they can now legally participate in capital raisings and in return receive a share of the company. There’s a maximum of $10,000 per eligible company, which can be invested through a crowdfunding platform with a financial licence. There’s a five-day cooling-off period in case you change your mind.

Companies must produce a disclosure document when they raise capital through crowd-sourced funding, so be sure to read up on the investment risks before participating. The law applies to unlisted public companies that are limited by shares with less than $25 million in gross assets and annual revenue.