As COVID-19 infection rates continue to rise (both globally and in Australia) causing further uncertainty about global economic recovery, ASX announced yesterday that it has extended its temporary capital raising relief until 30 November 2020 (well beyond the original expiry date of 31 July 2020).
 
This means that listed entities seeking to raise capital in the next few months may avail themselves of the temporary extra placement capacity (up to 25%) on condition that the placement is accompanied by a follow-on entitlement offer (under exceptions 1, 2 and/or 3 of Listing Rule 7.2) or follow-on share purchase plan offer (both subject to a number of conditions). It also means that the one-for-one cap on non-renounceable entitlements offers in Listing Rule 7.11.3 will not apply until the end of November.
 
ASX has noted that the revised date will provide companies with an additional month to complete a capital raising after publishing their audited accounts following ASIC’s extension to reporting deadlines until 31 October 2020 (for companies with a 30 June year-end).  The extension also aligns with ASIC extending its relief to allow 10 day suspension periods for low doc capital raisings until 2 October 2020 enabling companies to remain in voluntary suspension longer while they structure their offer and engage with investors.
 
We have assisted a number of clients with the use of this relief since it was introduced, and for companies looking to rely on this temporary relief, they need to be aware that there are procedures required to be complied with in order to use this temporary relief. Importantly, we are also aware that ASX has prevented some companies from relying on the relief. Companies need to engage with ASX prior to any capital raising announcement where they are seeking to rely on this relief.
 
For further advice in relation to raising capital in the current market, please contact us in our Perth office on  +61 8 9321 4000 or our Melbourne office on +61 3 9111 9400.