Article by Nicole Radice, Partner
Michelle Eastwell, Senior Associate
The Australian Securities and Investments Commission (ASIC) has
implemented a number of measures to enhance market disclosure and
facilitate capital raisings. HopgoodGanim distributed an Alert on
this issue in April this year.
Facilitating capital raising
ASIC's new equity capital raising policies are intended to
streamline the fundraising process and make it easier to include
retail investor participation in fundraisings. ASIC hopes to
achieve this by increasing the types of situations where a full
prospectus or product disclosure statement is not required.
The new policies allow:
existing shareholders or unitholders to purchase further shares
or units worth up to $15,000 through security purchase plans
without a prospectus or product disclosure statement. The previous
limit for this was $5,000. There is an expectation that ASX will
act to ensure the Listing Rules are consistent with this new limit.
However, the ASX has not as yet amended the Listing Rules to
reflect this position, and as a result an ASX waiver would need to
be obtained to make use of the increased limit;
the responsible entity of a listed managed investment scheme to
make placements of interests in the scheme at a discount of more
than 10 percent to the current unit price without member
a greater number of rights issues and placements to be
undertaken using a cleansing notice instead of a prospectus or
product disclosure statement. This is a result of ASIC considering
the grant of case-by-case relief to extend the maximum suspension
period to more than the current five days;
accelerated rights issues to be undertaken in a manner which
does not infringe the takeover provisions where a person, as a
result of their participation in an accelerated rights issue,
exceeds the takeover threshold;
ASIC to grant case-by-case relief to enable members to
participate in rights issue shortfall facilities, even if this
would result in such members exceeding the 20 percent takeover
threshold by doing so; and
ASIC to grant case-by-case relief to enable an underwriter of a
dividend reinvestment plan to take up any shortfall, even where in
doing so the underwriter may exceed the takeover threshold.
Continuous disclosure changes for unlisted disclosing
ASIC has also released Regulatory Guide 198, which clarifies how
unlisted disclosing entities should provide continuous disclosure
to investors. Unlisted disclosing entities are currently subject to
continuous disclosure obligations under the Corporations Act, which
requires them to disclose information by lodging that information
with ASIC regardless of whether or not that information was also
available on the entity's website.
ASIC has accepted that for most disclosing entities, disclosure
of information on the entity's website is a more useful and
direct way of communicating with investors. If an unlisted
disclosing entity publishes material information on its website in
accordance with the 'good practice guidance' set out in
Regulatory Guide 198 and satisfies the other requirements of the
Regulatory Guide, the entity will not be required to lodge the
information with ASIC in order to comply with its continuous
What will this mean?
The new measures will hopefully facilitate equity capital
raisings by allowing listed entities to raise capital more easily
and in a timely manner, without diminishing market integrity or
investor protection. In particular, the new measures are likely to
facilitate rights issues to existing shareholders of listed
companies and make share purchase plans more attractive to listed
companies. The move to allow unlisted disclosing entities to use
their websites to ensure that their continuous disclosure
obligations are met is also a welcome step forward.
In the years following the global financial crisis of 2008 many Australian investors lost their life savings as financial products failed and the Australian Stock Exchange shed over 3,000 points.
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