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We work collaboratively with our clients to build strong, sustainable relationships. Our team is committed to delivering consistent high standards of service, and we understand the importance of accessibility. Working with us, you'll enjoy open communication, meaning well scoped, properly resourced and effectively managed matters.

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Latest Case

Providing strategic advice on expansion structures November 16, 2018

Founded in Bondi Beach in 2012, Bailey Nelson has rapidly grown into a global eyewear retailer and service provider with boutiques in Australia, London, Canada and New Zealand. The strong demand for their products and … Continued

Latest News

Winner of William Ah Ket Scholarship 2019 announced October 9, 2019

Wednesday 9 October 2019 A Victorian lawyer has been named this year’s winner of the William Ah Ket Scholarship. Tienyi Long, a legal and governance officer at Glen Eira City Council in Melbourne, was awarded … Continued

Latest Article

Final changes to the ASX Listing Rules announced October 15, 2019

On 10 October 2019 the Australian Securities Exchange (ASX) released its response to feedback received on its consultation paper ‘Simplifying, clarifying and enhancing the integrity and efficiency of the ASX listing rules’, together with the … Continued

Crowd funding and Peer-to-Peer lending

Crowd funding – equity based

The Treasurer announced on Monday 21 March, that the Federal Government is actively considering the following changes to Australia’s equity-based crowd funding regime:

  • increasing the capital raising thresholds (currently fixed at $5 million in any 12 month period)
  • reducing the cooling off period for investors
  • permitting intermediaries and platform operators to cancel an investment for legitimate reasons
  • reducing the $5 million asset and turnover test applicable to issuers.

These reforms would have the effect of significantly expanding the scope of Australia’s equity-based crowd funding regime.

Crowd funding – debt-based

Relevant to debt-based crowd funding, ASIC also issued on Monday 21 March 2016, an important guidance on ‘peer-to-peer’ lending or market place lending platforms.

Peer-to-peer lending or market place lending platforms are often conducted under the guise of debt-based crowd funding, and are typically structured as unregistered managed investment schemes or an arrangement through which retail or wholesale investors invest money, which is then lent to borrowers.

Market place lending arrangements commonly involve the use of an online platform, such as a website, on which loan requests can be made. Loan requests are then matched against offers to invest. Investors either select the loans they wish to invest in or they are marked with loans that meet specified criteria.

Peer-to-peer lending: key issues addressed in the ASIC guidance

Issue Guidance
Licencing Providers of marketplace lending products will generally need to hold:

  • an Australian financial services licence
  • an Australian credit licence if the loans are consumer loans; ie loans to individuals for domestic, personal or household purposes.
Registration as a managed investment scheme Registration as a scheme is:

  • not required if the market place lending arrangement is made available only to wholesale investors
  • required if the market place lending arrangement is made available also to retail investors.
Specific AFSL authorisation required in the case of operation of registered scheme Marketplace lending arrangements provided through a managed investment scheme will generally require a tailored AFSL authorisation to operate a registered scheme that matches investors and borrowers.
Operation of unregistered scheme If marketplace lending is made available to wholesale investors only, there is no requirement to register the scheme. However, the marketplace lending provider will nonetheless need an AFSL to cover financial product advice, and dealing in interests in the scheme.
Consumer loans Where consumer loans are made, the marketplace lending provider must comply with the responsible lending practices and requirements provided for in the National Consumer Credit Protection Act and the National Credit Code.
ASIC relief A marketplace lending provider may be able to demonstrate that it is unreasonable to comply with a requirement under the Corporations Act or National Consumer Credit Protection Act or National Credit Code. Examples of relief provided by ASIC include:

  • relief from the withdrawal requirements to facilitate withdrawal of cash by members while the scheme is illiquid – applicable where, for example, each investor has a separate loan portfolio
  • relief from the requirement to register each loan entered into through the lending platform as a separate managed investment scheme
  • applicable where, for example, a single loan is funded by multiple investors.
Advertising Promoters of marketplace lending products must ensure advertising and promotional material fairly represents the products. Risks of investing in the product must be explained, in addition to the benefits:

  • comparisons must be clearly explained
  • references to borrowers’ creditworthiness must not create a false and misleading impression
  • it is not appropriate to compare a marketplace lending product with a banking product, such as savings accounts or term deposits.
Security Loans marketed as secured loans must be properly secured.

 

Crowd funding – equity based

The Treasurer announced on Monday 21 March, that the Federal Government is actively considering the following changes to Australia’s equity-based crowd funding regime:

  • increasing the capital raising thresholds (currently fixed at $5 million in any 12 month period)
  • reducing the cooling off period for investors
  • permitting intermediaries and platform operators to cancel an investment for legitimate reasons
  • reducing the $5 million asset and turnover test applicable to issuers.

These reforms would have the effect of significantly expanding the scope of Australia’s equity-based crowd funding regime.

Crowd funding – debt-based

Relevant to debt-based crowd funding, ASIC also issued on Monday 21 March 2016, an important guidance on ‘peer-to-peer’ lending or market place lending platforms.

Peer-to-peer lending or market place lending platforms are often conducted under the guise of debt-based crowd funding, and are typically structured as unregistered managed investment schemes or an arrangement through which retail or wholesale investors invest money, which is then lent to borrowers.

Market place lending arrangements commonly involve the use of an online platform, such as a website, on which loan requests can be made. Loan requests are then matched against offers to invest. Investors either select the loans they wish to invest in or they are marked with loans that meet specified criteria.

Peer-to-peer lending: key issues addressed in the ASIC guidance

Issue Guidance
Licencing Providers of marketplace lending products will generally need to hold:

  • an Australian financial services licence
  • an Australian credit licence if the loans are consumer loans; ie loans to individuals for domestic, personal or household purposes.
Registration as a managed investment scheme Registration as a scheme is:

  • not required if the market place lending arrangement is made available only to wholesale investors
  • required if the market place lending arrangement is made available also to retail investors.
Specific AFSL authorisation required in the case of operation of registered scheme Marketplace lending arrangements provided through a managed investment scheme will generally require a tailored AFSL authorisation to operate a registered scheme that matches investors and borrowers.
Operation of unregistered scheme If marketplace lending is made available to wholesale investors only, there is no requirement to register the scheme. However, the marketplace lending provider will nonetheless need an AFSL to cover financial product advice, and dealing in interests in the scheme.
Consumer loans Where consumer loans are made, the marketplace lending provider must comply with the responsible lending practices and requirements provided for in the National Consumer Credit Protection Act and the National Credit Code.
ASIC relief A marketplace lending provider may be able to demonstrate that it is unreasonable to comply with a requirement under the Corporations Act or National Consumer Credit Protection Act or National Credit Code. Examples of relief provided by ASIC include:

  • relief from the withdrawal requirements to facilitate withdrawal of cash by members while the scheme is illiquid – applicable where, for example, each investor has a separate loan portfolio
  • relief from the requirement to register each loan entered into through the lending platform as a separate managed investment scheme
  • applicable where, for example, a single loan is funded by multiple investors.
Advertising Promoters of marketplace lending products must ensure advertising and promotional material fairly represents the products. Risks of investing in the product must be explained, in addition to the benefits:

  • comparisons must be clearly explained
  • references to borrowers’ creditworthiness must not create a false and misleading impression
  • it is not appropriate to compare a marketplace lending product with a banking product, such as savings accounts or term deposits.
Security Loans marketed as secured loans must be properly secured.