ASIC gives capital raising relief
The corporate watchdog is assisting companies that need to raise funds from investors urgently due to the impact of COVID-19.
The Australian Securities and Investments Commission (ASIC) announced that it would helped listed companies raise capital quickly by giving temporary relief to enable certain ‘low doc’ offers, including rights offers, placements, and share purchase plans, made to investors even if they did not meet all the normal requirements.
ASIC 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.”
Without the relief some firms may be prevented from utilising a ‘low doc’ offer because they had been suspended for a long period while assessing the impact of the virus on their business and preparing for a capital raising.
Usually, the ‘low doc’ capital raising regime is not available if a firm had been suspended for a total of more than five days in the last 12 months. This relief would allow firms that had been suspended for a total of up to 10 days in the previous 12 months to raise capital.
Firms would be eligibly for the 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.
Given the Government’s travel advice on 19 March, 2020, was changed to a level four warning of “do not travel” overseas, under ASIC’s relief:
If Company A was suspended for four-days prior to 19 March, 2020, it can conduct a ‘low doc’ capital raising even if it is suspended for up to another six 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 said.
Due to the uncertainty of markets, ASIC said it would revoke its relief with 30 days’ notice.
Recommended for you
As advisers risk losing two-thirds of FUA during the $3.5 trillion wealth transfer, two co-founders underscore why fostering trust with the next generation is vital to retaining intergenerational wealth.
As advisers seek greater insights into FSCP determinations, what are the various options considered by the panel and can a decision be appealed?
Amid the current financial adviser shortage, advice firm Link Wealth is looking to expand its financial literacy program for high school students across the country.
TAL Risk Academy has updated its range of ethics courses to help financial advisers meet their CPD requirements following adviser feedback, including interpreting FSCP determinations.
