The new laws will remove the need for proprietary companies to transition to public companies. Instead, investors will be protected by additional obligations, which are currently proposed to include a requirement to have a minimum of two directors, complete financial reporting in accordance with accounting standards (including audit requirements where more than $1 million is raised), and restrictions on related party transactions. In return, the prospectus disclosure requirements for CSF offers will be relaxed and ‘CSF shareholders’ will not count towards the current shareholder limit (of 50 non-employee shareholders) which applies to proprietary companies.
For a copy of the exposure draft of the new laws click here, together with the accompanying explanatory memorandum here.
For further details on the existing and upcoming CSF laws for public companies (which will commence on 29 September 2017), see our earlier blog:
You will need to move quickly to have your say on the new laws for proprietary companies – with submissions closing on Tuesday, 6 June 2017. However, the likely timing of the further changes remains to be seen and, with the recent laws for public companies having taken nearly 3 years to pass, may be met with some scepticism. It is one we will continue to watch closely.