ASX and ASIC implement temporary emergency capital raising relief measures

ASX and ASIC have announced new and temporary emergency capital raising relief measures due to the effects of the COVID-19 crisis. These changes are designed to assist listed entities in raising capital utilising an expanded 25% placement capacity under the ASX Listing Rules until 31 July 2020, and expanding the use of ‘low doc’ offers under the Corporations Act until revoked by ASIC.

ASX’s relief includes:

  1. Back to back trading halts – ASX will permit two consecutive trading halts (allowing a total of up to 4 trading days) to consider, plan for and execute a capital raising. When requesting a trading halt, entities must make it clear to ASX that the request is for two consecutive trading halts for the purposes of considering a capital raising.
  2. Temporary uplift in 7.1 placement capacity to 25% – ASX has raised the placement capacity available to entities under Listing Rule 7.1 from 15% to 25% subject to and conditional upon an entity who takes advantage of the increased placement capacity making either (at the same or lower price than the placement price) a follow-on:
    • a) pro rata entitlement offer under Exceptions 1, 2 and/or 3 of Listing Rule 7.2; and/or
    • b) offer to retail investors under a share purchase plan (SPP).

Only one placement of ordinary securities may be conducted using the additional placement capacity (and that increased placement capacity may not be ratified or replenished), unless an individual waiver is granted.  There are also additional conditions that apply to the SPP offer.

Importantly, eligible entities that already have the additional 10% placement capacity available to them under Listing Rule 7.1A can choose to use either the 7.1A capacity or the new additional placement capacity under 7.1, but cannot use both. 

  1. Temporary waiver on one-for-one cap on non-renounceable entitlement offers under Listing Rule 7.11.3 – ASX will permit securities to be offered at a greater ratio than one security for each security held under non-renounceable entitlement offers.

Complementing ASX’s changes, ASIC has granted relief to listed companies to conduct ‘low doc’ offers including pro rata entitlement offers, placements and SPPs where the company does not meet the normal requirements (e.g. where a prospectus would typically be required).  The ‘low doc’ capital raising regime is available if a company has been suspended for no more than five days in the 12 months before the offer and ending 19 March 2020, and no more than 10 days in the 12 months before the offer.

Directors still need to ensure that the capital raising is in the best interests of the company, and that the company continues to comply with its continuous disclosure obligations notwithstanding that the company may be in suspension.

This article has been prepared by Alfonso Grillo (Partner), David Woodford (Partner) and Tom Sapountsis (Associate).  Please do not hesitate to contact us to discuss utilising the relief measures implemented by ASX and ASIC, or your capital raising initiatives generally.

Alfonso Grillo

David Woodford

Tom Sapountsis