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Emergency Capital Raising Relief for Listed Companies

Listed companies now have access to a number of emergency capital raising measures announced by the Australian Securities Exchange (ASX) and the Australian Securities and Investments Commission (ASIC) which provide practical and timely assistance to many ASX-listed entities.

In response to the rapidly evolving health and economic consequences of the COVID-19 pandemic, ASX and ASIC have recognised the critical need for many companies to raise capital urgently to sustain their operations during this unprecedented period of disruption.

If your company is considering undertaking a placement, rights issue or share purchase plan, contact Andrew Whitten, Principal at Automic Group, on +61 419 117 337 or David Hwang, Principal at Automic Group, on +61 433 2922 290, who can advise you on the below capital raising relief measures and help you navigate the uncertainty and complexity.

Placement Changes

ASX has announced that it will temporarily lift from 15% to 25% a company’s placement capacity under Listing Rule 7.1 (Temporary Extra Placement Capacity). Importantly, a condition of utilising the Temporary Extra Placement Capacity is that companies must also undertake a follow-on Rights Issue or Share Purchase Plan at an issue price the same or lower than the placement price. However, a company that is eligible for the extra 10% capacity under Listing Rule 7.1A will not be able to use both its 7.1A capacity and the Temporary Extra Placement Capacity. Companies that have already used part of its existing 7.1 or 7.1A capacity in the 12 months, will need to take this into account when assessing its Temporary Extra Placement Capacity. Companies that have exhausted its existing capacity should consider ratifying its prior issues as soon as possible (via a general meeting) to take advantage of the Temporary Extra Placement Capacity.

ASIC is also providing temporary relief to enable certain “low doc” offers (including placements) to be made to investors in circumstances where the company has been suspended for a total of more than five days in the previous 12 months. ASIC’s temporary relief will double this to a total of up to 10 days (however certain conditions will apply). This is particularly important now where some companies may have been suspended for more than 5 days to assess the impact of COVID-19 while preparing for a capital raising.

Rights Issue

The temporary relief by ASIC for “low doc” offers outlined above will also apply to Rights Issues. Also, companies that have been suspended for longer than 10 days may still be able to apply to ASIC for individual relief.

Share Purchase Plans (SPP)   

The temporary relief by ASIC for “low doc” offers outlined above will also apply to SPPs. Also, companies that have been suspended for longer than 10 days may still be able to apply to ASIC for individual relief.

What do I do next?

For advice on how best to match your capital raising needs with the measures announced by ASX and ASIC, please contact:

The contents of this article, current at the date of publication, are for reference purposes only. They do not constitute legal advice and should not be relied upon as such. Specific legal advice about your circumstances should be sought before taking any action based on this publication.