The Institute of Public Accountants (IPA) has welcomed proposed legislation to extend crowd-sourced funding to proprietary companies.  The legislation will already apply to public companies from 29 September 2017.

"The IPA is pleased to see that the Government has recognised the need to provide an alternative source of funding for entrepreneurs and small to medium enterprises," said IPA chief executive officer, Andrew Conway.

"We are also pleased to see the reduced disclosure and compliance requirements, including those relating to the holding of an AGM; being able to post reports online; and removing the need for an auditor unless the offer is greater than $1 million.

 "This will relieve unlisted public companies from significant regulatory burdens over a five year period.  However, we are concerned about what happens after the initial five year period.

 "This legislation will now bring Australia into line with other countries that have already adopted and embraced similar laws, including the USA, UK, Canada, New Zealand and many European countries.

 "The proposed amendments will bring significant benefits that flow from bridging the 'capital gap' faced by many young and emerging start-ups.

 "Australia has a relatively poor global record of commercialising innovation and lags behind most advanced economies on this matter so addressing the lack of funding for start-ups is critical.  It is these innovative firms that drive economic transformation, and which are much needed to respond to a dynamic, global environment.

 "One concern this legislation raises is the additional volume of work it represents for the already over-worked regulator, ASIC.  ASIC will need to continue to monitor the activities of companies involved in crowd-sourced funding, as well as activities of their intermediaries and their offer platforms.

 "As is always the case, investor protections will be tested by those seeking alternative, innovative or just different types of investments," said Mr Conway.