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Corporate News - 23 April 2020

 The ASX yesterday announced revisions to the class waivers it introduced to help facilitate emergency capital raisings during COVID-19 (Class Waivers) aimed primarily at providing greater transparency with respect to capital raisings undertaken in reliance on the Class Waivers. ASIC has also today supported ASX’s position. 

 Under the revisions, additional conditions have been imposed on the ability to utilise a company’s expanded placement capacity under ASX Listing Rule 7.1 in reliance on the Class Waiver.  In particular:

  • Companies must now give notice to ASX of their intention to utilise the additional placement capacity, including detailing whether the capital raising is proposed to be made to raise urgently needed capital to address issues arising in relation to the COVID-19 health crisis or for some other purpose. 
  • Companies will be required to announce the results of the placement within 5 business days of completing the placement, including detail with respect to the approach the company took in identifying investors and how allocations were determined.  This will require that companies confirm whether one of the objectives underpinning the allocation process was to allocate a pro-rata proportion of the capital raising to existing shareholders.
  • Companies will be required to confirm that shares were not issued under the placement to related parties, or otherwise whether related party participation was permitted in accordance with the ASX Listing Rules.
  • Companies must provide both ASX and ASIC with a detailed allocation spreadsheet within 5 business days of completing the placement, detailing all persons to whom securities were issued and the number of securities each person was allocated.

 It is clear from these additional conditions, together with the fact that ASX and ASIC have reiterated that directors need to ensure they balance all considerations with the view of acting in the best interests of the company when structuring any capital raisings, that ASX and ASIC have some concern that companies may utilise the expanded placement capacity in reliance on the Class Waivers for an improper purpose.  Given that ASX also expressly stated that they may withdraw the Class Waivers from an individual listed entity, it follows that ASX may exercise their discretion to withdraw the Class Waivers for a particular company following the company giving notice of its intention to rely on the Class Waivers if the company is not utilising the expanded placement capacity as a response to COVID-19.  Directors should be aware that the prevailing circumstances created by COVID-19 do not create circumstances where directors can avoid their duties as directors to act in the best interests of shareholders.

 In addition to the additional conditions imposed, companies are now permitted to utilise the expanded placement capacity by undertaking a placement followed by a standard rights issue, rather than the placement being followed by an accelerated rights issue or share purchase plan, as was previously required.  These changes will mean that smaller listed entities will also be able to raise urgently needed capital.

 The Class Waivers apply to capital raisings announced on or after 23 April 2020 and will remain in place until 31 July 2020 unless ASX otherwise decides to extend or withdraw them (either on an individual basis or for the market as a whole).  A summary of the Class Waivers (as amended) is set out below:





ASX has raised the 15% limit on placements under Listing Rule 7.1 to 25% provided the entity makes a follow-on:

(a) standard rights issue;

(b) accelerated entitlement offer; or

(c) share purchase plan (SPP) offer,

(each at the same or lower price as the placement price) (Temporary Extra Placement Capacity).


  • Only one placement of fully paid ordinary securities is allowed (Placement).

  • Once utilised the Temporary Extra Placement Capacity will not be able to be ratified or replenished under Listing Rules 7.1 or 7.4 (they will revert as normal).

  • An announcement within 5 Business Days following the Placement must be made confirming results of the Placement, the entity’s approach to allocations and that no securities were issued to related parties, substantial 30%+ holders and substantial 10%+ holders who have nominated as a director or any of their associates – unless the requisite shareholder approval has/will be obtained; the issue fell within an exception in Listing Rule 10.12; or ASX granted a waiver.

  • A detailed allocation spreadsheet will need to be provided to ASIC and ASX within 5 Business Days of the Placement.  ASIC will be monitoring these disclosures carefully.

  • An entity can choose between using is extra 10% capacity under 7.1A Mandate or the Temporary Extra Placement Capacity, but cannot use both.

  • Prior issues (under 15% capacity or 7.1A Mandate) will need to be deducted to calculate remaining Temporary Extra Placement Capacity.

 For a Placement and follow-on entitlement offer (standard or accelerated): entities will automatically qualify for the normal “supersize” waiver ASX grants where an entity is contemplating a Placement followed by a pro rata entitlement offer.

 For a Placement and follow-on SPP: ASX will waive the sizing and pricing requirements for SPPs imposed under Listing Rule 7.2 as long as the follow-on SPP occurs at a price equal to or lower than the Placement price. Note that entities will still only be able to utilise exception 5 of Listing Rule 7.2 once in a 12 month period. Where there is a limit on the amount to be raised under the SPP offer, the entity must disclose why there is a limit, how the limit was determined and any scale back arrangements (which will need to be pro-rata based on either existing holdings or the number of securities applied for).  The entity must also use best endeavours to ensure that the SPP offer participants have a reasonable opportunity to participate equitably in the overall capital raising.

 The Class Waiver also  removes the usual pricing constraints for SPPs in exception 5 of Listing Rule 7.2. Note that the $30,000 cap per shareholder will remain (unless ASIC has granted a waiver or exemption) as well as ASIC restrictions on low doc relief.

 In addition, ASX has granted a waiver of LR 10.12 exception 4 so that parties covered by Listing Rule 10.11 (including directors) can participate in the SPP on the same terms as other security holders.


ASX has removed the one-for-one cap on non-renounceable entitlement offers in Listing Rule 7.11.3.

ASX expects entities to choose a ratio that meets their capital raising needs whilst being fair and reasonable.


ASX will allow entities to request two consecutive trading halts (allowing a total of up to 4 trading days in halt) to consider and prepare for a capital raising.

The consecutive trading halts must be applied for in the one request. The request must state that it is being made under Listing Rule 17.1 and that the purpose is considering, planning and executing a capital raising  (back-to-back trading halts will not be permitted for other purposes).

 In this regard, ASIC has granted temporary relief to enable certain “low doc” offers (including rights issues, placements and SPPs) to be made to investors even if they do not meet the normal requirements. Entities will be able to do a low doc offer 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 (when the Government changed its travel advice to “do not travel overseas”). 


Please contact us in our Perth office +61 8 9321 4000 or our Melbourne office  +61 3 9111 9400  if you are considering raising capital or require advice on any of the temporary relief measures established by ASX or ASIC.

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