The federal government’s controversial equity crowdfunding reforms have successfully passed the lower house despite criticisms from the opposition and wider startup community.
In a speech to parliament on Wednesday, Labor MP Ed Husic said there had been a “complete and utter failure” to address the concerns of the startup community. While the opposition didn’t intend to block the legislation, Husic said, it would look to add amendments.
The shadow parliamentary secretary assisting with digital innovation and startups encouraged the government to consult with the community and not rush the bill.
“If the government decides to park this bill and engage in genuine consultation to address widespread concerns about these proposed laws then we as the opposition would not criticise the government for that,” Husic said.
“We would not criticise the government if it suspends passage of the bill to help make sure it gets the bill in better shape. We would rather get this right than rush things.
“If the government is determined to press ahead with the bill, we will not invest time in blocking it but we will hold them most definitely to account for the lived experience of the bill.”
Introducing the bill, minister for small business Kelly O’Dwyer talked up the benefits of opening up equity crowdfunding to retail investors.
“The intent of this bill is to assist startups and other small businesses that may have difficulty accessing equity funding due to the costs of disclosure and other requirements, while protecting mum and dad investors,” O’Dwyer said.
“The government crafted this bill after extensive stakeholder consultation and considering international models.”
The government’s equity crowdfunding reforms were revealed to parliament in December, with Labor quickly withdrawing support and referring them to a parliamentary inquest, which is expected to report back by the end of the month.
The Corporations Amendment (Crowdsourced Funding) Bill 2015 expanded the option of equity crowdfunding to retail investors along with sophisticated ones.
Under the legislation, a $5 million cap will be placed on companies raising capital through this method, and a $10,000 limit will be placed on retail investors.
The most controversial aspect of the bill is that startups would have to convert to an unlisted public company in order to take part and despite many exemptions to public reporting rules, Husic says this is “onerous and heavy-handed”.
The bill has been labelled a “dead duck” by VentureCrowd founder Tim Heasley, who says it won’t have “any impact at all”.
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During the speech, Husic listed a number of concerns Labor has with the legislation, including forcing companies to go public, the investor and company caps and the “prevention of access by unit trusts to the regime”.
According to the Husic, the government is no longer consulting with the opposition on this matter and the former bipartisanship on the issue has been lost.
“It appears the Turnbull government’s approach to bipartisanship in this space reflected its broader mindset – say one thing, do another,” he said.
“That is not how bipartisanship in the innovation space is going to work.
“So much talk about being agile and nimble, yet so little evidence of this happening in real life.”