Raising money by crowd-sourced funding: the company tests and the caps

What Part 6D.3A is for

The Part states its object plainly: “to provide a disclosure regime that can be used for certain offers of securities for issue in small unlisted companies, instead of complying with the requirements of Part 6D.2.” A CSF offer is one that is eligible under the Part and “expressed to be made under this Part”. The offer goes out on the platform of a CSF intermediary: “a financial services licensee” whose licence expressly authorises it to provide a crowd funding service. This guide reads the Act as compiled on 19 September 2026 (compilation 149) and the Corporations Regulations 2001 as compiled on 1 September 2026.

Is the company eligible?

Section 738H(1) lists six conditions, and every one must be met at the test time:

1. (a) “the company is a public company limited by shares, or the company is a proprietary company that: (i) has at least 2 directors; and (ii) meets all the other requirements (if any) prescribed by the regulations for the purposes of this subparagraph;”
2. (b) “the company’s principal place of business is in Australia;”
3. (c) “a majority of the company’s directors (not counting alternate directors) ordinarily reside in Australia;”
4. (d) “the company complies with the assets and turnover test (see subsection (2));”
5. (e) “neither the company, nor any related party of the company, is: (i) a listed corporation; or (ii) included in an official list of a financial market operated outside this jurisdiction;”
6. (f) “neither the company, nor any related party of the company, has a substantial purpose of investing in securities or interests in other entities or schemes.”

Subsection (2) sets the assets and turnover test. At the test time, two figures must each be less than $25 million, or less than a different amount if the regulations prescribe one:

• the value of the consolidated gross assets of the company and all its related parties;
• the consolidated annual revenue of the company and all its related parties.

Both figures count the related parties too, and the word is “less than”: a company at exactly $25 million does not meet it.

Is the offer eligible?

A company that passes can still make an offer the Part will not carry. Section 738G(1) requires all six of these:

1. an offer by a company for the issue of its own securities;
2. the company is an eligible CSF company when the offer is made;
3. the securities are of a class the regulations specify, which regulation 6D.3A.01(1) names as fully-paid ordinary shares ;
4. the offer complies with the issuer cap;
5. the company does not intend the funds to be used, to any extent, by it or a related party to invest in securities or interests in other entities or schemes;
6. any other requirements in the regulations are met.

One of those other requirements, in regulation 6D.3A.01(2), requires that the company not intend the money to be used by it to issue a credit facility to a related party that is not a wholly-owned subsidiary, or by a related party to issue one to the company or to another related party.

The issuer cap

Under section 738G(2), the most the new offer seeks, plus everything raised in the 12 months before it through CSF offers by the company or its related parties, plus anything raised in that period through offers that needed no disclosure because of section 708(1) or (10), must not exceed “$5 million”, or a different amount the regulations prescribe. CSF offers made before that 12-month window are not counted.

The offer document and the gatekeeper

Regulation 6D.3A.02(3) gives the CSF offer document a table of contents and four sections: risk warnings, information about the offering company, information about the offer, and information about investor rights. Section 1 must carry a set statement. It opens “Crowd‑sourced funding is risky.”, says that issuers include new or rapidly growing ventures, and warns “You may lose your entire investment, and you should be in a position to bear this risk without undue hardship.”

Before publishing, the intermediary checks the company’s identity: “the name, ACN and type of the offering company”, its registered office and its principal place of business. ASIC’s guide adds that if the intermediary decides the company is not eligible, it must not publish the offer.

ASIC’s Regulatory Guide 261, issued in June 2020, also explains these points for companies, among others:

• an offer may stay open for three months at most, or a shorter period the offer document sets;
• a company and its related parties may have only one CSF offer open or suspended at a time;
• an advertisement for the offer must tell investors to consider the offer document and the general risk warning;
• shares must not be offered in, or because of, an unsolicited meeting or telephone call.

The two limits that protect retail investors

A company planning its raise meets two rules that sit on the investor’s side. Under section 738ZC(1), the responsible intermediary must reject a retail client’s application if, counting only CSF offers by the same company on that intermediary, it would take what the person pays in any 12 months above “$10,000”, or a different amount the regulations prescribe. And under section 738ZD(1), a retail client “may withdraw the application within 5 business days after the application is made.”

ASIC’s guide describes the shares themselves frankly: investments through CSF offers “may be highly speculative”, and may be illiquid. For the company, raising this way brings its own reporting, audit and governance duties, which RG 261 sets out.