On 13 January 2025, the Australian Securities and Investments Commission (ASIC) announced that it is consulting on the future of the ASIC Corporations (Business Introduction Services) Instrument 2022/805 (the Instrument). The Instrument, which provides conditional regulatory relief for certain business introduction services, is set to expire on 1 April 2025.
ASIC is inviting feedback on two key issues: whether the relief for managed investment schemes should be extended and whether previous relief for securities, other than debentures, should be reinstated. Submissions must address why such reinstatement is necessary, particularly if the crowd-sourced funding (CSF) regime under the Corporations Act 2001 does not adequately support small- to medium-scale capital raisings. Stakeholders have until 5 February 2025 to provide input.
The Instrument grants conditional relief from specific provisions in the Corporations Act, including fundraising, financial product disclosure, hawking, and advertising requirements, for those operating business introduction services. However, it does not exempt service providers from holding Australian financial services (AFS) licence if their activities involve providing financial services. The Instrument also mandates lodging a notice of reliance, though ASIC reports minimal use of the Instrument for managed investment schemes since October 2022.
Business introduction services, which identify investors for issuers or sellers by sharing investment opportunities, have benefited from similar relief provisions since 2002. These provisions were initially granted under ASIC Class Order [CO 02/273], extended multiple times, and eventually replaced by the current Instrument in 2022.
When the Instrument was issued in 2022, ASIC opted not to extend relief for securities, citing the flexibility and affordability of the CSF regime for small- and medium-sized unlisted companies. The regime includes investor protection measures and does not require disclosure for offers made to wholesale or sophisticated investors. At the time, ASIC noted limited reliance on the previous Class Order for raising funds through business introduction services.
ASIC now seeks input on whether reinstating relief for securities is justified, particularly in cases where the CSF regime is perceived as insufficient. Respondents are expected to outline the benefits of such changes and provide evidence supporting their position.
The consultation period ends at 5 pm AEDT on 5 February 2025, giving stakeholders 23 days to submit feedback. Following this, ASIC will evaluate the responses and determine whether to extend or adjust the regulatory relief for business introduction services. The outcome will impact managed investment schemes and potentially companies seeking to raise capital through these services.
