20-075MR Facilitating capital raisings during COVID-19 period

ASIC is committed to refocusing its regulatory efforts on challenges created by the COVID-19 pandemic.

In line with this approach, ASIC is helping listed companies raise capital quickly by giving temporary relief to enable certain ‘low doc’ offers (including rights offers, placements and share purchase plans) to be made to investors, even if they do not meet all the normal requirements. This will assist companies that need to raise funds from investors urgently because of the impact of COVID-19.

Without this relief, some listed companies may be prevented from utilising a ‘low doc’ offer because they have been suspended for a long period while assessing the impact of COVID-19 on their business and preparing for a capital raising.

The ‘low doc’ capital raising regime is not available if a company has been suspended for a total of more than five days in the previous 12 months. Companies that have been suspended for more than five days would instead need to prepare a prospectus or apply to ASIC for individual relief. Those options can be costly and involve delay.

ASIC has therefore provided temporary relief to allow ‘low doc’ placements, rights issues and share purchase plans (SPP) where a listed company has been suspended for a total of up to 10 days in the previous 12-month period. Companies can rely on ASIC Corporations (Trading Suspension Relief) Instrument 2020/289 and ASIC Corporations (Amendment) Instrument 2020/290 without making an individual application.

Commissioner John Price said:

‘We want to give companies more fundraising flexibility in these circumstances. Many will need to seek a trading suspension to understand how COVID-19 will affect them and to put a capital raising in place.

However, the usual rules still apply. Directors need to ensure the capital raising is in the best interests of the company and companies need to make sure they are keeping the market informed via continuous disclosure announcements, even when they are in suspension.’

How ASIC’s temporary relief works

Entities will be able to rely on regulatory relief if:

  • They have been suspended for up to 10 days in the 12 months before the offer, and
  • They were not suspended for more than five days in the period commencing 12 months before the offer and ending 19 March 2020.

19 March was when the Federal Government changed its travel advice to the most severe Level 4 warning: ‘do not travel’ overseas.

Under ASIC’s relief:

  • If Company A was suspended for 4-days prior to 19 March 2020, it can conduct a ‘low doc’ capital raising even if it is suspended for up to another 6 days after 19 March 2020.
  • If Company B had not been suspended prior to 19 March 2020, it can still conduct a ‘low doc’ capital raising if it suspended for up to 10 days after 19 March 2020.

Entities that have been suspended for more than five days before 19 March 2020 or entities that have been suspended for more than 10 days in total will need to apply for individual relief to conduct a ‘low doc’ capital raising or prepare and lodge a prospectus. ASIC will closely scrutinise any individual applications with regard to the existing policy in Regulatory Guide 173 Disclosure for on-sale of securities and other financial products (RG 173), Regulatory Guide 189 Disclosure relief for rights issue (RG 189), and Regulatory Guide 125 Share and interest purchase plans (RG 125). ASIC will also consider the entity’s need for funds and if the offer hasn’t been extended to retail investors, why that is the case.

ASIC’s legislative relief is temporary, but we do understand the market needs certainty. ASIC will therefore revoke its relief with 30 days’ notice. The decision to revoke will be based on an assessment of the market and in consultation with key stakeholders.


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