In our recent article, COVID-19 ASX relief package, we discussed the waivers introduced by the ASX and ASIC on 31 March to provide temporary relief measures to allow listed entities affected by the COVID-19 pandemic to raise urgent capital.
On 22 April 2020, the ASX, in consultation with ASIC, released amendments to these temporary relief measures to provide further disclosure requirements and to address concerns about perceived unfairness. We have summarised these changes, effective for capital raisings announced on or after 23 April 2020, below.
Extra placement capacity
The key amendments to the temporary extra placement capacity waiver include:
- Types of capital raisings: entities are now permitted to do a placement followed by a standard rights issue or followed by an accelerated pro rate entitlement offer or a placement followed by a share purchase plan. The purpose of this amendment is to extend the benefits of the waiver to smaller entities that do not have a substantial base of institutional security holders.
- Additional notice requirements prior to capital raising: entities are required to provide written notice to the ASX (that is not released to the market) prior to undertaking a capital raising advising of its intention to rely on the waiver and whether the proposed capital raising is proposed to be made in response to issues arising out of the COVID-19 pandemic or for another purpose.
- Additional notice requirements post capital raising: entities must make an announcement to the market within five business days of completing the relevant placement announcing the results of the placement, detailing the approach the entity took in identifying investors to participate in the placement and how their respective allocations in the placement were determined, and confirming that to the best of its knowledge, no securities were issued or agreed to be issued to any related parties, unless the issue is conditional on shareholder approval.
- Allocation details to be provided to the ASX and ASIC: within five days of completing a placement entities must provide to the ASX (on a not for release to the market basis) and ASIC a detailed allocation spreadsheet showing details of the parties allocated securities under the placement, their existing holding, the number of securities they applied for, and the number of securities that they were allocated under the placement. This includes any zero allocations under the placement.
We note that the above is a summary of the key amendments. Please contact us if you intend on undertaking a capital raising for a discussion on any implications of the amendments.
Back-to-back trading halts
The waivers allow ASX listed entities to request two consecutive trading halts to consider and execute any capital raisings. The ASX has clarified that any entities wishing to rely on this waiver, must clearly request two consecutive trading halts in its request under Listing Rule 17.1. The entity must also confirm in its request that the consecutive trading halts are for the purposes of considering, planning, and executing a capital raising. The ASX has noted that it will not entertain subsequent applications for a second consecutive trading halt.
Cancellation of dividends or distributions
The ASX has also provided further guidance on the cancellation of dividends and distributions. The ASX has asked that the announcement to the market regarding the decision to not pay a dividend or distribution in respect of a period if it has either previously announced an intention to make such a payment, or had paid a dividend or distribution in respect of the prior corresponding period should explain the legal basis for the cancellation. This should also confirm that the cancellation is authorised by the entity’s constitution, if that is a legal requirement. The ASX has asked entities to announce any such cancellations prior to its securities commencing trading ex-dividend/distribution.
The ASX has also noted that the classification of a dividend/distribution paid on securities may have implications for other products such as options, warrants, and hybrid securities that reference those securities. Entities should carefully consider any such impacts on other products as a result of any changes to dividend/distribution cancellations.
Please contact a member of our national Capital Markets team if you have any questions or would like to discuss a potential capital raise relying on these waivers.
Emma Cook | Partner | +61 466 632 057 | [email protected]
Mahsa Taiebi | Lawyer | +61 7 3338 7542 | [email protected]