The Corporations Act 2001 (Cth) (Act) generally limits the number of shareholders for a private corporation to 50.
However, there is an exemption in Part 6D.3A of the Act which allows private companies with less than $25 million in consolidated gross assets and less than $25 million in consolidated annual revenue (including related parties) to use crowd source funding (CSF) to raise up to $5 million a year.
Those shareholders which are sourced using CSF are not counted towards the 50-shareholder limit.
Below, we discuss the various requirements for companies to access these exemptions:
The company must:
The offer must:
The offer document must contain:
CSF can be attractive for companies which are struggling to obtain funds from traditional sources. However, there are some potential issues which should be considered before jumping in:
If you would like more information on how your business can take advantage of the rules for crowd-source funding, our team would be more than happy to assist.
This article includes general information only and is not specific to your situation.
If you require assistance in relation to anything contained within this article, please contact us.
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