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Shareholder (Dis)Empowerment through Crowd-Sourced Equity Funding


Steve Kourabas

The introduction of Crowd-Sourced Equity Funding (‘CSEF’) into the Australian corporate fundraising landscape sought to give effect to the democratisation and direct participation goals of the Financial Technology (‘FinTech’) movement. CSEF offers a useful avenue for micro- and small-to-medium enterprises (‘MSMEs’) to access funds from the ‘crowd’. However, this article argues that the current regulatory framework fails to give effect to the core principles underpinning CSEF as part of the FinTech movement. This creates a particularly vulnerable cohort of shareholders who are not given a ‘voice’ in the corporation, nor do they have the typical ‘exit’ options associated with public share ownership. The article proposes that corporate governance reforms should aim to enhance the distinctive attraction of CSEF as a corporate fundraising mechanism: the collaborative pursuit of non- financial motivations for investment, and the adoption of engagement mechanisms that advance efforts towards the democratisation of finance and collaboration as a means of social interaction.

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(2023) 46(1) UNSWLJ 143: