COVID-19 capital raising relief extended by ASX

ASX has announced an extension of temporary emergency capital raising relief put in place to provide listed companies with greater flexibility to raise capital amidst the challenges of the COVID-19 pandemic. 

In this alert , wediscuss this extension. 

The original relief

As discussed in our previous alert here, ASX had previously introduced two class order waivers (Class Waivers) to temporarily increase a company’s placement capacity under Listing Rule 7.1 (from 15% to 25%) and to permit the ratio of securities that can be offered in a non-renounceable offer to be greater than one security offered for each security held. The Class Waivers were subsequently updated on 22 and 23 April 2020, but were due to expire on 31 July 2020.

Extension

ASX has decided to extend the relief granted by the Class Waivers until 30 November 2020. The extension has been implemented by the publication of two replacement Class Waivers dated 9 July 2020, being:

1. Temporary Extra Placement Capacity Class Waiver; and
2. Non-renounceable Offers Class Waiver

(together, the Replacement Class Waivers).

The Replacement Class Waivers apply to all relevant capital raisings announced on or after 9 July 2020 and on or before 30 November 2020.

Adjustments

ASX has taken the opportunity to make some further minor amendments to the original Class Waivers. These include:

1. for the Temporary Extra Placement Capacity Class Waiver:

• clarifying that the waiver applied to Listing Rules 7.40 and 10.11;
• clarifying that for a security purchase plan (SPP), scale back arrangements may include measures to prevent shareholders splitting holdings to obtain a larger offer under the SPP;
• allowing for notification to ASX of the results of certain SPPs within five business days (rather than the three business days required under the Listing Rules);
• increasing the requirements for companies seeking to rely on the waiver, who must now:

1. when giving notice to the ASX of an intention to offer securities in reliance on the waiver, include its proposed allocation policies;
2. receive from ASX confirmation in writing that the details in the company’s notice to ASX are acceptable;
3. when announcing the capital raising, include a statement that it is relying on the waiver and explain the purposes for which the company is seeking to raise capital and how they relate to COVID-19; and
4. complete the capital raising within a ‘reasonable period’ of announcing the capital raising.

2. for the Non-renounceable Offers Class Waiver:

• increasing the requirements for companies seeking to rely on the waiver, who must now:

1. when giving notice to the ASX of an intention to make a non-renounceable offer that relies on the waiver, include the purposes for which the company is seeking to raise capital and, if it is proposing to reserve the right to issue any shortfall remaining, its proposed allocation policy for the shortfall;
2. receive from ASX confirmation in writing that the details in the company’s notice to ASX are acceptable;
3. when announcing the capital raising, include a statement that it is relying on the waiver and explain the purposes for which the company is seeking to raise capital and how they relate to COVID-19; and
4. complete the capital raising within a ‘reasonable period’ of announcing the capital raising.

If your company is considering undertaking a capital raising and would like further advice on the changes discussed in this article, please contact our Corporate Advisory and Governance team.