Aggregated News From Investment Management Regulators

ASIC supports increased transparency in capital raisings


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ASIC notes the Australian Securities Exchange’s (ASX) class waiver decision – Temporary Extra Placement Capacity dated 31 March 2020 and the further amendments to the Class Waiver dated 22 April 2020, as well as, the recent publication of the Compliance Update no 04/20. ASIC supports the enhanced disclosure requirements for placement allocations and Share Purchase Plans (SPP) that are being conducted by companies using the temporary emergency capital raising waiver announced by ASX on 31 March 2020.

These requirements reflect ASIC’s expectation that directors must provide transparent disclosure to the market about the capital raising decisions they are making which are required to be in the best interests of the company.

Issuers and licensees should also consider the findings of Report

 ‘Allocations in equity raising transactions’. This report outlines a number of better practices for directors of listed companies to consider when raising capital and for licensees who are involved in transactions. These practices include proactive engagement with licensees associated with the transaction to understand their allocation recommendations and consider the impact of capital raising on existing security holders.

Commissioner John Price said, ‘Directors should act in the best interests of the company in making fundraising decisions. They should consider not only speed and certainty of fundraising but also fairness considerations. Companies should be as transparent as possible and be prepared to explain to their shareholders the fundraising decisions they have made.

As described in the amendments to the Class Waiver dated 22 April 2020 and in the Compliance Update no 04/20, issuers are required to give to ASX and ASIC the detailed allocation spreadsheets for capital raisings completed in reliance on the class waiver.

ASIC will be reviewing the allocation spreadsheets and monitoring the disclosures made by companies about placements, rights offers and SPPs to ensure they are accurate, sufficiently detailed and provide meaningful, rather than ‘boiler plate’ disclosure.

For example, a description that a placement was made:

More generally, ASIC will also be continuing surveillance work following on from the findings of Report 605. This will examine the conduct of licensees and directors in capital raising activities beyond those using the temporary emergency capital raising relief. 

ASIC considers that the enhanced disclosure required under ASX’s temporary waiver is also appropriate for other capital raisings that do not need to rely on the waiver. We encourage companies to make these types of disclosures for all placements and SPPs.

Regulator Information

Abbreviation: ASIC
Jurisdiction: Australia

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