On 31 March 2020, ASIC and the ASX announced temporary capital raising relief measures to assist ASX-listed entities affected by the COVID-19 pandemic to undertake emergency capital raisings.

ASX relief measures

The temporary emergency measures announced by the ASX will be implemented by way of class order waivers under listing rule 18.1 (meaning listed entities do not need to apply individually to the ASX to access the relief measures), and they will expire on 31 July 2020 unless the ASX otherwise decides to remove or extend them.  A summary of the main temporary emergency measures is as set out below:

Back-to-back trading halts

• A listed entity can now request 2 consecutive trading halts, allowing a total of up to 4 trading days in halt to consider, plan for and execute a capital raising.
• Back-to-back trading halts will not be permitted for other purposes.
• If an entity is not able to complete its capital raising within the 4 trading days, it will need to request a voluntary suspension for more time to do so.

Increased placement capacity

• The 15% limit on placements by listed entities without shareholder approval in listing rule 7.1 has been increased to 25%, however, a listed entity seeking to utilise this increased capacity in a placement must:
• make a follow-on pro-rata rights offer to its shareholders; or
• conduct a follow-on offer to its retail shareholders under a share purchase plan,
• in each case, at the same or lower price as the placement price.

• The increased placement capacity can only be used to issue fully paid ordinary securities.
• A listed entity can only utilise the increased placement capacity once, and once it has done so, the used up 25% placement capacity cannot be subsequently ratified or replenished.
• Entities that wish to do more than one placement using the increased capacity, or to issue securities that are not fully paid ordinary securities, will need to apply for individual waivers from the ASX.
• Eligible entities that already have the extra 10% placement capacity under listing rule 7.1A can either use their existing rule 7.1A capacity or the increased placement capacity under listing rule 7.1, but not both.

Waiver of 1:1 limit on non-renounceable rights offers

• The ASX has waived the 1:1 ratio limit on standard and accelerated non-renounceable rights offers.
• Rights offers with a ratio of greater than 1:1 now do not need to be renounceable and there is no cap in the size of non-renounceable rights offers.
• Listed entities proposing to rely on this waiver for non-renounceable rights offers need to notify the ASX of their intention to do so.

Full details of the ASX relief measures can be found here.

ASIC relief measures

• ASIC is helping listed entities raise capital quickly by giving temporary relief to enable certain ‘low doc’ offers (including rights offers, placements and share purchase plans) to be made to investors, even if they do not meet all the normal requirements.
• Normally the ‘low doc’ capital raising regime is not available if a listed entity has been suspended from trading on a stock exchange for a total of more than 5 days in the previous 12 months.  Listed entities to which this ‘low doc’ capital raising regime is not normally available would need to prepare a prospectus, or apply to ASIC for individual relief to nevertheless raise capital under this regime.
• Under ASIC’s temporary relief, a listed entity will be able to raise capital under the ‘low doc’ capital raising regime if:
• it has been suspended from trading on a stock exchange for no more than 10 days in the 12 months before the capital raising offer; and
• in the period commencing 12 months before the capital raising offer, and ending on 19 March 2020, it had not been suspended from trading on a stock exchange for more than 5 days.
• 19 March 2020 was the date on which the Australian government changed its travel advice to the most severe Level 4 warning: 'do not travel' overseas.
• Entities that have been suspended from trading on a stock exchange for more than 5 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’s relief is temporary and may be revoked by ASIC with 30 days’ notice.

Full details of the ASIC relief measures can be found in ASIC’s media release on 31 March 2020 entitled “20-075MR Facilitating capital raisings during COVID-19 period”, which is accessible via ASIC’s website.