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This is a Bill, not an Act. For current law, see the Acts databases.
2016-2017
The Parliament of the
Commonwealth of Australia
HOUSE OF REPRESENTATIVES
Presented and read a first time
Corporations Amendment
(Crowd-sourced Funding for Proprietary
Companies) Bill 2017
No. , 2017
(Treasury)
A Bill for an Act to amend the law relating to
corporations, and for related purposes
No. , 2017
Corporations Amendment (Crowd-sourced Funding for Proprietary
Companies) Bill 2017
i
Contents
1
Short title ........................................................................................... 1
2
Commencement ................................................................................. 1
3
Schedules ........................................................................................... 2
Schedule 1--Amendments
3
Part 1--Main amendments
3
Corporations Act 2001
3
Part 2--Other amendments
14
Corporations Act 2001
14
No. , 2017
Corporations Amendment (Crowd-sourced Funding for Proprietary
Companies) Bill 2017
1
A Bill for an Act to amend the law relating to
1
corporations, and for related purposes
2
The Parliament of Australia enacts:
3
1 Short title
4
This Act is the Corporations Amendment (Crowd-sourced Funding
5
for Proprietary Companies) Act 2017.
6
2 Commencement
7
(1) Each provision of this Act specified in column 1 of the table
8
commences, or is taken to have commenced, in accordance with
9
column 2 of the table. Any other statement in column 2 has effect
10
according to its terms.
11
12
2
Corporations Amendment (Crowd-sourced Funding for Proprietary
Companies) Bill 2017
No. , 2017
Commencement information
Column 1
Column 2
Column 3
Provisions
Commencement
Date/Details
1. Sections 1 to 3
and anything in
this Act not
elsewhere covered
by this table
The day this Act receives the Royal Assent.
2. Schedule 1,
Part 1
The day after the end of the period of 6
months beginning on the day this Act
receives the Royal Assent.
3. Schedule 1,
Part 2
The day after this Act receives the Royal
Assent.
Note:
This table relates only to the provisions of this Act as originally
1
enacted. It will not be amended to deal with any later amendments of
2
this Act.
3
(2) Any information in column 3 of the table is not part of this Act.
4
Information may be inserted in this column, or information in it
5
may be edited, in any published version of this Act.
6
3 Schedules
7
Legislation that is specified in a Schedule to this Act is amended or
8
repealed as set out in the applicable items in the Schedule
9
concerned, and any other item in a Schedule to this Act has effect
10
according to its terms.
11
Amendments Schedule 1
Main amendments Part 1
No. , 2017
Corporations Amendment (Crowd-sourced Funding for Proprietary
Companies) Bill 2017
3
Schedule 1--Amendments
1
Part 1--Main amendments
2
Corporations Act 2001
3
1 Section 9
4
Insert:
5
CSF audit threshold means:
6
(a) unless paragraph (b) applies--$3 million; or
7
(b) any amount prescribed by the regulations for the purposes of
8
this paragraph.
9
CSF shareholder, of a proprietary company, means an entity that
10
holds one or more securities of the company due to being issued
11
with the securities pursuant to a CSF offer by the company.
12
2 Subsection 45A(1) (note 2)
13
Repeal the note, substitute:
14
Note 2:
A proprietary company needs to be limited by shares or be an
15
unlimited company with a share capital (see subsection 112(1)).
16
Note 3:
A proprietary company needs to:
17
(a) have no more than 50 shareholders, although employee
18
shareholders and shareholders connected with CSF offers do not
19
count for this purpose; and
20
(b) not do anything to require disclosure to investors under
21
Chapter 6D (except in limited circumstances);
22
(see section 113).
23
3 Paragraph 2.1 of the small business guide in Part 1.5
24
After "not counting employee shareholders", insert ", CSF shareholders,
25
or holders of shares issued pursuant to CSF offers that have yet to be
26
traded in certain ways".
27
4 Paragraph 8 of the small business guide in Part 1.5
28
After "own employees or shareholders", insert "or under a CSF offer".
29
Schedule 1 Amendments
Part 1 Main amendments
4
Corporations Amendment (Crowd-sourced Funding for Proprietary
Companies) Bill 2017
No. , 2017
5 Paragraph 10.3 of the small business guide in Part 1.5
1
Omit:
2
•
ASIC directs it to do so.
3
substitute:
4
•
ASIC directs it to do so; or
5
•
it has one or more CSF shareholders at any time during the financial
6
year.
7
6 At the end of subsection 113(2)
8
Add:
9
; and (c) do not count as a shareholder any CSF shareholder of the
10
company; and
11
(d) do not count as a shareholder an entity, in relation to a
12
security of the company held by the entity, if:
13
(i) that security was originally issued to another entity
14
pursuant to a CSF offer by the company; and
15
(ii) unless the circumstances (if any) prescribed by the
16
regulations for the purposes of this subparagraph
17
exist--no securities of the company have been traded on
18
a financial market (whether in Australia or elsewhere);
19
and
20
(iii) all the other requirements (if any) prescribed by the
21
regulations for the purposes of this subparagraph are
22
met.
23
7 Subsection 113(3)
24
Repeal the subsection, substitute:
25
(3) A proprietary company must not engage in any activity that would
26
require disclosure to investors under Chapter 6D, except for:
27
(a) an offer of its shares to:
28
(i) existing shareholders of the company; or
29
(ii) employees of the company or of a subsidiary of the
30
company; or
31
(b) a CSF offer.
32
Amendments Schedule 1
Main amendments Part 1
No. , 2017
Corporations Amendment (Crowd-sourced Funding for Proprietary
Companies) Bill 2017
5
8 Paragraph 117(2)(mc)
1
Repeal the paragraph.
2
9 Subparagraphs 163(2)(d)(ii) and (iii)
3
Repeal the subparagraphs, substitute:
4
(ii) a copy of each document (including an agreement or
5
consent) or resolution that is necessary to ascertain the
6
rights attached to issued or unissued shares of the
7
company.
8
10 After subsection 169(6)
9
Insert:
10
Proprietary companies that have made CSF offers
11
(6AA) The register of a proprietary company that has made one or more
12
CSF offers must also show:
13
(a) the date on which every issue of shares in the company
14
pursuant to each CSF offer takes place; and
15
(b) the number of shares issued pursuant to each CSF offer; and
16
(c) the shares issued to each member pursuant to each CSF offer;
17
and
18
(d) the date on which an entity ceases to be a CSF shareholder of
19
the company for a particular share in the company;
20
during any period in which the company has one or more CSF
21
shareholders.
22
11 At the end of paragraph 178A(1)(b)
23
Add:
24
; (ix) subsection 169(6AA) (shares issued as a result of CSF
25
offers).
26
12 At the end of subsection 178C(1)
27
Add:
28
; (d) that the company has started to have one or more CSF
29
shareholders;
30
(e) that the company has ceased to have any CSF shareholders.
31
Schedule 1 Amendments
Part 1 Main amendments
6
Corporations Amendment (Crowd-sourced Funding for Proprietary
Companies) Bill 2017
No. , 2017
13 After subsection 201A(1)
1
Insert:
2
(1A) However, a proprietary company must have at least 2 directors
3
while the company has one or more CSF shareholders. Of those
4
directors:
5
(a) if there are only 2 of them--at least one of them must
6
ordinarily reside in Australia; or
7
(b) otherwise--a majority of them must ordinarily reside in
8
Australia.
9
Note:
The company must also have at least 2 directors when making the
10
CSF offer (see paragraph 738H(1)(a)).
11
14 At the end of subsection 254X(1) (before the notes)
12
Add:
13
; and (f) if the company is a proprietary company and the shares are
14
issued pursuant to a CSF offer--that the company has one or
15
more CSF shareholders as a result of the issuing of the
16
shares.
17
15 At the end of subsection 254Y(1) (before the note)
18
Add:
19
; and (e) if the company is a proprietary company that has made one or
20
more CSF offers--whether the cancellation has resulted in
21
the company ceasing to have any CSF shareholders.
22
16 Subsection 285(1) (table item 3, column headed
23
"comments")
24
Before "A small proprietary company", insert "A small proprietary
25
company preparing a financial report because it has CSF shareholders
26
only has to have an audit if it has raised a total equal to or exceeding the
27
CSF audit threshold from CSF offers.".
28
17 Subsection 285(1) (table item 3, column headed
29
"comments")
30
Omit "under s. 293 only", substitute "under section 293 usually only".
31
Amendments Schedule 1
Main amendments Part 1
No. , 2017
Corporations Amendment (Crowd-sourced Funding for Proprietary
Companies) Bill 2017
7
18 After paragraph 292(2)(b)
1
Insert:
2
; or (c) it has one or more CSF shareholders at any time during the
3
financial year.
4
19 At the end of subsection 296(1A)
5
Add:
6
; and (c) paragraph 292(2)(c) (about having CSF shareholders) does
7
not apply to the company for the financial year.
8
20 Subsection 298(1AC)
9
Repeal the subsection, substitute:
10
(1AC) This subsection covers a company if the company has not had its
11
financial report for the relevant financial year audited because
12
subsection 301(2) or (5) exempts it from the requirement to do so
13
under subsection 301(1).
14
21 At the end of subsection 298(3)
15
Add:
16
; and (c) paragraph 292(2)(c) (about having CSF shareholders) does
17
not apply to the company for the financial year.
18
22 Subsection 301(2)
19
Repeal the subsection, substitute:
20
Small proprietary companies
21
(2) A small proprietary company's financial report for a financial year
22
does not have to be audited if:
23
(a) the report is required only because of:
24
(i) paragraph 292(2)(c) (about having CSF shareholders);
25
or
26
(ii) a direction under section 293; or
27
(iii) both paragraph 292(2)(c) and a direction under
28
section 293; and
29
(b) in a case where subparagraph (a)(i) or (iii) applies--as at the
30
end of the financial year, the company has raised a total less
31
Schedule 1 Amendments
Part 1 Main amendments
8
Corporations Amendment (Crowd-sourced Funding for Proprietary
Companies) Bill 2017
No. , 2017
than the CSF audit threshold from all the CSF offers it has
1
ever made; and
2
(c) in a case where subparagraph (a)(ii) or (iii) applies--the
3
direction did not ask for the financial report to be audited.
4
23 Paragraph 314(1)(a)
5
After "reports", insert "(that are required to be prepared)".
6
24 Subsection 314(1AF)
7
Repeal the subsection, substitute:
8
(1AF) If a company:
9
(a) is a public company that is covered under section 738ZI at
10
the end of the financial year mentioned in subsection (1); or
11
(b) is a small proprietary company that has one or more CSF
12
shareholders at any time during the financial year mentioned
13
in subsection (1);
14
it may provide the reports, or the concise report, for that financial
15
year by making a copy of the reports, or the concise report, readily
16
accessible on a website. The company also need not comply with
17
subsection (1AB).
18
25 Subsection 314(2A)
19
Repeal the subsection, substitute:
20
(2A) If paragraph (1AF)(a) or (b) applies to the company for the
21
financial year mentioned in subsection (1), apply subsection (2) to
22
the company in relation to that financial year with the following
23
modifications:
24
(a) insert the words "if the company's financial report for the
25
year is required to be audited--" at the start of each of
26
paragraphs (2)(c) and (d);
27
(b) omit the words "and that the full financial report and
28
auditor's report will be sent to the member free of charge if
29
the member asks for them" in paragraph (2)(e).
30
26 Paragraph 319(2)(a)
31
Repeal the paragraph, substitute:
32
Amendments Schedule 1
Main amendments Part 1
No. , 2017
Corporations Amendment (Crowd-sourced Funding for Proprietary
Companies) Bill 2017
9
(a) a small proprietary company that prepares a report in
1
response to:
2
(i) a shareholder direction under section 293; or
3
(ii) an ASIC direction under section 294;
4
if paragraph 292(2)(c) (about having CSF shareholders) does
5
not also apply to the company for the financial year; and
6
27 Subsection 324CH(1) (table items 1 to 9)
7
Omit "the audited body is a small proprietary company", substitute
8
"subsection (3A) (about small proprietary companies) applies to the
9
audited body".
10
28 After subsection 324CH(3)
11
Insert:
12
Small proprietary companies
13
(3A) This subsection applies to an audited body for a financial year if
14
the body:
15
(a) is a small proprietary company for the financial year; and
16
(b) either:
17
(i) does not have any CSF shareholders at any time during
18
the financial year; or
19
(ii) has, as at the end of the financial year, raised a total less
20
than the CSF audit threshold from all the CSF offers it
21
has ever made.
22
29 Paragraphs 324CI(e), 324CJ(e) and 324CK(e)
23
Repeal the paragraphs, substitute:
24
(e) subsection 324CH(3A) (about small proprietary companies)
25
does not apply to the audited body for the most recently
26
ended financial year.
27
30 Section 325
28
Before "The", insert "(1)".
29
31 At the end of section 325
30
Add:
31
Schedule 1 Amendments
Part 1 Main amendments
10
Corporations Amendment (Crowd-sourced Funding for Proprietary
Companies) Bill 2017
No. , 2017
(2) The directors of a proprietary company must ensure that there is an
1
auditor for the company at all times during the period:
2
(a) starting 1 month after:
3
(i) the time the company first raises a total equal to or
4
exceeding the CSF audit threshold from all the CSF
5
offers it has ever made; or
6
(ii) if the period starting because of subparagraph (i), or
7
because of an earlier operation of this subparagraph, has
8
ended--the time the company makes a later CSF offer;
9
and
10
(b) when the company ceases to have any CSF shareholders at a
11
later time in a particular financial year--ending when the
12
company's financial report for that financial year has been
13
audited.
14
(3) However, subsection (2) does not apply for any period of 1 month
15
or less starting when a vacancy occurs in the office of auditor of
16
the company (however that vacancy is caused).
17
(4) A director of a company must take all reasonable steps to comply
18
with, or to secure compliance with, subsection (2).
19
32 Section 327E (heading)
20
Repeal the heading, substitute:
21
327E ASIC may appoint a company auditor if auditor removed but
22
not replaced
23
33 Subsection 327E(1)
24
Repeal the subsection, substitute:
25
(1) This section applies if:
26
(a) the directors of a proprietary company fail to appoint an
27
auditor under subsection 325(2); or
28
(b) a public company fails to appoint an auditor under
29
subsection 327D(2) or (3).
30
The failure is referred to as the auditor replacement failure.
31
Amendments Schedule 1
Main amendments Part 1
No. , 2017
Corporations Amendment (Crowd-sourced Funding for Proprietary
Companies) Bill 2017
11
34 Subsection 327E(6)
1
Repeal the subsection, substitute:
2
(6) Subject to this Part, an auditor appointed under this section holds
3
office until:
4
(a) for a proprietary company--the company's next general
5
meeting; or
6
(b) for a public company--the company's next AGM.
7
35 Section 327F (heading)
8
Repeal the heading, substitute:
9
327F ASIC's general power to appoint a company auditor
10
36 Subsection 327F(1)
11
After "public company", insert ", or of a proprietary company that has
12
one or more CSF shareholders,".
13
37 Paragraph 327F(1)(a)
14
Repeal the paragraph, substitute:
15
(a) the company or its directors fail to appoint an auditor when
16
required by this Act to do so; and
17
38 Subsection 327F(2)
18
Repeal the subsection, substitute:
19
(2) Subject to this Part, an auditor appointed under this section holds
20
office until:
21
(a) for a proprietary company--the company's next general
22
meeting; or
23
(b) for a public company--the company's next AGM.
24
39 Section 327G (heading)
25
Repeal the heading, substitute:
26
Schedule 1 Amendments
Part 1 Main amendments
12
Corporations Amendment (Crowd-sourced Funding for Proprietary
Companies) Bill 2017
No. , 2017
327G Restrictions on ASIC's powers to appoint a company auditor
1
40 Section 611 (after table item 19)
2
Insert:
3
Proprietary companies that have CSF shareholders
19A
An acquisition of a relevant interest in issued voting shares in a
proprietary company if:
(a) the company has one or more CSF shareholders; and
(b) all the other requirements (if any) prescribed by the regulations
for the purposes of this paragraph are met.
41 Paragraph 738H(1)(a)
4
Repeal the paragraph, substitute:
5
(a) the company is a public company limited by shares, or the
6
company is a proprietary company that:
7
(i) has at least 2 directors; and
8
(ii) meets all the other requirements (if any) prescribed by
9
the regulations for the purposes of this subparagraph;
10
42 Section 738ZI
11
Before "A company", insert "(1)".
12
43 Paragraph 738ZI(a)
13
Repeal the paragraph, substitute:
14
(a) the company:
15
(i) was registered as a public company limited by shares
16
under Part 2A.2 in response to an application lodged
17
under section 117 before the eligibility end day; or
18
(ii) was converted from a proprietary company to a public
19
company limited by shares under Part 2B.7 in response
20
to an application lodged under section 163 before the
21
eligibility end day; and
22
44 At the end of section 738ZI
23
Add:
24
(2) In this section:
25
Amendments Schedule 1
Main amendments Part 1
No. , 2017
Corporations Amendment (Crowd-sourced Funding for Proprietary
Companies) Bill 2017
13
eligibility end day means the day Part 1 of Schedule 1 to the
1
Corporations Amendment (Crowd-sourced Funding for
2
Proprietary Companies) Act 2017 commences.
3
45 At the end of Division 7 of Part 6D.3A
4
Add:
5
738ZK Related party transactions--proprietary companies that
6
have one or more CSF shareholders
7
Chapter 2E applies to a proprietary company that has one or more
8
CSF shareholders as if references to a public company were instead
9
references to such a proprietary company.
10
46 Schedule 3 (after table item 116KB)
11
Insert:
12
116KM
Subsection 325(4)
25 penalty units or imprisonment for 6
months, or both.
Schedule 1 Amendments
Part 2 Other amendments
14
Corporations Amendment (Crowd-sourced Funding for Proprietary
Companies) Bill 2017
No. , 2017
Part 2--Other amendments
1
Corporations Act 2001
2
47 Paragraph 301(5)(b)
3
Omit "$1 million", substitute "$3 million".
4
48 Section 328D (heading)
5
Repeal the heading, substitute:
6
328D Public company auditor (appointment of auditor when $3
7
million raised using crowd-sourced funding)
8
49 Subsection 328D(1)
9
Omit "$1 million", substitute "$3 million".
10
50 Paragraph 738H(1)(e)
11
Repeal the paragraph, substitute:
12
(e) neither the company, nor any related party of the company,
13
is:
14
(i) a listed corporation; or
15
(ii) included in an official list of a financial market operated
16
outside this jurisdiction;
17
51 Subsections 738X(7) and (9)
18
Omit "one month", substitute "14 days".
19
52 In the appropriate position in Chapter 10
20
Insert:
21
Amendments Schedule 1
Other amendments Part 2
No. , 2017
Corporations Amendment (Crowd-sourced Funding for Proprietary
Companies) Bill 2017
15
Part 10.31--Transitional provisions relating to the
1
Corporations Amendment (Crowd-sourced
2
Funding for Proprietary Companies) Act
3
2017
4
5
1643 Application of amendments
6
The amendments made by items 50 and 51 of Schedule 1 to the
7
Corporations Amendment (Crowd-sourced Funding for
8
Proprietary Companies) Act 2017 apply in relation to CSF offers
9
made at or after the commencement of those items.
10
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