The co-operative conundrum: obtaining capital in a complex regulatory landscape

New national database to promote investment in bioenergy industry
January 10, 2016
Crowd-sourced funding Bill opens capital prospects
January 25, 2016

The co-operative conundrum: obtaining capital in a complex regulatory landscape

For organisations trying to raise capital, the introduction into the Commonwealth Parliament of the Corporations Amendment (Crowd-sourced Funding) Bill 2015 (‘the Bill’) late in 2015 is somewhat of a watershed moment. Previously, financial regulation has inhibited Australians taking advantage of crowd sourced funding. If passed the Bill will allow some unlisted public companies to raise up to $5 million in funds in any 12 month period and will remove certain impediments that previously restricted small businesses from utilising crowd sourcing. While the Bill does not expressly include co-operatives (although this could always change), the momentum generated by the increased federal funding for co-operatives and the recent Senate Inquiry means that considering how this Bill could be relevant to co-operatives is important.
Capital raising can be a challenge for co-operatives. While the mechanisms are there are present in legislation, such as share capital, co-operative capital units and debentures, none are conducive to attracting capital in a way that a public company limited by shares can (something that we argue is not always a bad thing).
A common theme in submissions and public hearings from the Senate Inquiry into co-operative, mutual and member-owned firms was challenges in accessing capital – share capital is restricted by an active membership test, and debentures and CCU’s are expensive and legally complex to establish which make them unviable for many co-operatives. These restrictions on capitalisation detract from the many benefits of incorporating as a co-operative, and many of the changes that the Bill would make would be of great benefit to co-operatives.
Over the next two weeks we will be publishing a commentary of the Bill and how we think the Bill can be used for the benefit of co-operatives.


Call Kingfisher Law Today

Kingfisher Law are Australia's agribusiness legal specialists and will discuss any legal issue you may be experiencing, in a confidential and professional manner. Call 1300 529 424 to book a consultation.

Or Request a Call Back

Subscribe to our mailing list