Article by Nicole Radice, Partner
Michelle Eastwell, Senior Associate
Ben McTaggart
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 approval;
- 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 entities
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 disclosure obligations.
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.
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