Ebru Davidson and Matt Persico

Temporary ASIC relief for capital raisings in the midst of COVID-19

Ebru Davidson and Matt Persico

1 April 2020

Capital Markets Mergers & Acquisitions Uncategorized

As part of its response to COVID-19, the Australian Securities and Investments Commission (ASIC) has announced some temporary relief measures that will improve the ability of listed companies to urgently raise capital.

Listed companies will be able to undertake ‘low doc’ capital raisings (including through placements, rights offers and share purchase plans) even if they do not meet all the normal regulatory requirements. ASIC acknowledges the recent spike in trading halts (and the length of those suspensions) due to COVID-19, which would ordinarily restrict many companies from being able to pursue ‘low doc’ options and instead require them to seek individual relief or to lodge a prospectus. As ASIC notes, these workarounds can be a burden both financially and from a time perspective. This is not ideal in the midst of a global pandemic.

ASIC’s temporary relief means entities can undertake ‘low doc’ capital raisings provided they:

  • have not been suspended for more than 10 days in the 12 months before the offer (instead of the usual 5 days); and
  • were not suspended for more than 5 days in the period commencing 12 months before the offer and ending 19 March 2020.

Entities will be able to rely on the ASIC Corporations (Trading Suspension Relief) Instrument 2020/289 and ASIC Corporations (Amendment) Instrument 2020/290 without the need for an individual relief application to ASIC.

Entities that do not meet the temporary relief criteria will need to either apply for individual relief to conduct a ‘low doc’ capital raising or lodge a prospectus in the ordinary course.

No set end date has been put in place for the temporary relief. However, ASIC has committed to providing 30 days’ notice of its decision to revoke the temporary relief.

We welcome ASIC’s announcement and trust it will provide greater flexibility for entities to secure additional capital –as many entities will require – during these unprecedented times.

For legal advice on the impact of ASIC’s temporary relief or to discuss the impact of COVID-19 on your business, please contact a member of our national Capital Markets team.