After your CSF offer, there's a few administrative things you'll need to do straight away. Then there's additional reporting you'll need to do each each year.

Update the company's share registry

You must submit 2 forms to ASIC to notify ASIC of the changes to your share register:

ASIC notifications — submit 2 forms to ASIC (within 28 days)

• ASIC form 484. ASIC Form 484 Change of company details must be submitted via ASIC’s online services at www.asic.gov.au/lodge. When completing the ASIC form 484, where a proprietary company has more than 20 members in a share class, the company must notify ASIC of the details of the top 20 members of each class.
• CSF Notification form. This paper-based form must be emailed to ASIC at online.exceptions@asic.gov.au with the subject line: ‘CSF – Notification of a change to company details’.

Companies must complete both the ASIC Form 484 and email the CSF notification form to ASIC for the changes to be made.
‍
You must notify ASIC within 28 days of the changes to your company.ASIC is actively reviewing company compliance with this obligation. ASIC is empowered to take a range of criminal, civil and administrative action to address alleged misconduct within its jurisdiction and is prepared to consider these options to address non-compliance with statutory obligations.

Ongoing ASIC notifications

You will need to continue to notify ASIC any time you change certain company details. For example, you will have to inform ASIC when the company starts to have CSF shareholders or stops having CSF shareholders.
Double check with your legal or financial advisor if you're not sure. ‍

Annual financial report & directors' report (by 31 October)

To do

As a small proprietary company with CSF shareholders, you must prepare an annual financial report and directors’ report for the past financial year and:

• Lodge the annual financial report and directors' report with ASIC by 31 October each year; and
  
• Publish the annual financial report and directors' report on a website accessible by your shareholders by 31 October each year.

What are these reports?
‍
As a small proprietary company with CSF shareholders, you must prepare an annual financial report and directors’ report for the past financial year and:

• Annual financial report: The annual financial report includes your company’s financial statements (which must be prepared in accordance with accounting standards), the notes to the financial statements and the directors’ declaration.
  
• Directors’ report: The directors’ report provides important information about your company’s operations, financial position and business strategies and prospects for future financial years.

This reporting obligation arises under Chapter 2M of the Corporations Act 2001 (Cth).
For more information about the contents of the reports, see ASIC’s Information Sheet 31 Lodgement of financial reports (INFO 31).
‍
ASIC is actively reviewing company compliance with this obligation. ASIC is empowered to take a range of criminal, civil and administrative action to address alleged misconduct within its jurisdiction and is prepared to consider these options to address non-compliance with statutory obligations.
‍
‍What accounting standards apply?

‍Under Chapter 2M of the Corporations Act, the financial statements need to be prepared in accordance with Australian Accounting Standards.

From 1 July 2021 (i.e. for the FY22 reporting period and beyond), there have been changes to the reporting requirements where companies with CSF shareholders will need to refer to AASB1060 when preparing the financial statements (when previously they could refer to AASB1039).

Essentially, the changes require CSF companies to prepare General Purpose Financial Statements. ASIC has introduced ‘Simplified Disclosure’ and this will still typically include:

• Statement of Financial Position
  
• Statement of Profit and Loss
• Statement of Cash Flows
• Statement of Changes in Equity
• Comprehensive Notes to Financial Statements
• Director’s Report and Declaration

See AASB 2020-2 for more information on these changes.

Our friends at Bluerock have prepared the following article: Crowd-Sourced Funding Reporting Requirements Have Changed. Here’s What It All Means.

‍Please chat to your accountant or advisor if you are unsure about your reporting obligations and how the change to the reporting requirements may effect your company after you made a CSF offer.

Do I need to make the reports available to shareholders?

‍Yes. If you are a small proprietary company, then you must make a copy of the annual report (or a concise report) readily accessible on a website by 31 October each year.

Many companies choose to publish their annual report on their website behind a password-protected login for shareholders or hosting it via their share registry provider.

You do not have to notify shareholders of alternative ways of receiving the report. However we see it as a great opportunity to engage with your network — such as sending an email to let them know where the report can be located.

Do the financial reports need to be audited?
‍
The company does not need to appoint an auditor unless:

• Your company is a small proprietary and has raised $3 million or more from all CSF offers (over all time, not just that financial year); or
  
• The company is a large proprietary company; or
• You are required to appoint an auditor for other reasons.
  

Next steps

• Review ASIC’s Information Sheet 31 Lodgement of financial reports (INFO 31) and complete the requirements.
• Prepare and lodge ASIC Form 388 along with your Annual financial report & directors’ report with ASIC by 31 October each year. There is a fee for late lodgement. Note: from time to time ASIC will grant extensions.
• Make the Annual financial report & directors’ report available to your shareholders by uploading it to a website by 31 October each year.
• If you would like to share a copy of your report with Birchal via support@birchal.com, we’d love to keep up to date with how you’re going.
• For more information, please see ASIC's Regulatory Guide 261: Guide for companies at sections: RG261.274 - 261.291.

Examples

Below are some examples from Birchal, the Speakeasy Group, and Bausele. Please note, the financial statements have been redacted.

These examples are provided for information purposes only and are not intended as legal or financial advice

Investor updates (at least quarterly)

We believe there is an awesome opportunity to build a network of strong, brand advocates through raising investment via a CSF offer. Lean in to this new, exciting network that your shareholders brings the business.

See our article Communicating with shareholders for best practice tips.

Your company obligations

Key resources:
‍
ASIC CSF information page
ASIC Regulatory Guide 261 Crowd-sourced funding: Guide for companies
The CSF Regime, Key Company Obligations & the Gatekeeper process
Company obligations after a CSF offer

Application of related party transaction rules

Proprietary companies with CSF shareholders become subject to the related party transaction rules in Chapter 2E of the Corporations Act 2001 (Cth).

While the rules in Chapter 2E are expressed to apply only to public companies, they also apply to proprietary companies with CSF shareholders (see s738ZK).

Related party transactions involve conflicts of interest because related parties of a company are often in a position to influence the decision of whether the benefit is provided to them. There is a risk that the interests of a related party may influence the decision making of directors to the detriment of the interests of other shareholders of the company.

To manage this risk, Chapter 2E requires proprietary companies with CSF shareholders to obtain shareholder approval to give a financial benefit to a related party, unless an exception applies.

Check out ASIC's guidance in RG261.292 - 304 for more information about related party transactions.

Please also have a chat to your legal advisor if you have any commercial arrangements (or propose to enter into any new ones) with a related party.

Application of takeover rules

Generally, all listed companies and unlisted companies (including proprietary companies) with more than 50 shareholders are subject to the takeover rules in Chapter 6 of the Corporations Act 2001 (Cth).

These rules regulate acquisitions of voting shares in a company that may have an effect on the control of the company.If your company is a proprietary company that has CSF shareholders and continues to be eligible to make CSF offers, then it is not subject to the takeover rules, even if it has over 50 shareholders.

However, your company will be subject to the general takeover principles and the Takeovers Panel will continue to have jurisdiction to hear disputes relating to control of your company.

The takeovers exception for proprietary companies with CSF shareholders, and the general takeover principles, are summarised in ASIC's Regulatory Guide 261 at sections RG261.310-332 and ASIC's Regulatory Guide RG6.It is important for your company to be aware of these rules and principles, as they affect the rights of shareholders (including CSF shareholders) if there is a change of control of your company in the future.

These examples are provided for information purposes only and are not intended as legal or financial advice, so please contact your advisor if you need assistance.

Common FAQs

A shareholder wants to transfer shares

Transfer within 12 months of the CSF offer
‍
If the shareholder wants to transfer shares within 12 months of the CSF Offer (and they have identified a buyer), there are two things a seller (and the company) would need to consider:

• The process in the company's Constitution for share transfers (often directors will have the discretion to approve or refuse a transfer)
  
• The on-sale provisions under s707 of the Corporations Act (see below)
  

While we can't provide legal advice, below is a summary of relevant provisions of the Corporations Act and ASIC's guidance.

ASIC gives guidance in RG261.39 that investors are not able to sell shares acquired under a CSF offer within 12 months of their issue without a prospectus or other disclosure document, unless an exemption in s708 applies or unless ASIC gives relief.

Exemptions in s708 of the Corporations Act include:

• small scale offers
• sales to sophisticated or professional investos
• sales for no consideration

There are no other specific “CSF requirements” for a transfer of shares.

Transfer after 12 months of the CSF Offer

If the shareholder wants to transfer shares within 12 months of the CSF Offer (and they have identified a buyer), the process for share transfers will be set out in the company's constitution (often directors will have the discretion to approve or refuse a transfer).

Please consult your legal advisor if you're not sure.

Off-market transfers

Shareholders who bought their shares under a CSF offer and shareholders who subsequently buy those shares via an off-market transfer do not count towards the 50 shareholder limit: see RG 261.305.

Tag the transferred shares as “CSF” shares after the transfer.

NOTE: this summary is for private, off-market transfers and will not be applicable to other exit or liquidity mechanisms.

Please note, this guide is intended to be a summary only and is not a substitute for legal advice. If you are unsure, please seek advice.