ASX and ASIC announce regulatory relief and clarification for listed entities
Both ASIC and the ASX have introduced a range of temporary measures to assist listed companies in response to COVID-19. Some of the key measures are summarised here.
ASX does not expect listed entities to make disclosures seeking to predict the impact of COVID-19, noting that entities can continue to rely on the the usual carve out for matters of supposition or those that are insufficiently definite. Entities are reminded that they must otherwise continue to observe their usual continuous disclosure obligations.
ASX has offered some practical guidance, including that entities should:
- Review any earnings guidance issued prior to the COVID-19 outbreak and either update or withdraw the guidance if it is no longer current;
- Update the market in respect of material operating decisions;
- For entities in financial difficulty, strictly observe continuous disclosure obligations and promptly announce any material developments (e.g. a resolution of the board to appoint an administrator);
- Announce any decision not to pay a dividend or distribution either previously announced or that had been paid or distributed in the prior corresponding period; and
- Carefully consider whether it is appropriate to request a trading halt or voluntary suspension upon becoming aware of material information requiring disclosure but before an announcement is released to the market.
Emergency capital raising
ASX has put in place several short term Class Waivers to assist entities that may need to raise emergency capital. The Class Waivers will expire on 31 July 2020, unless ASX decides to remove or extend them.
The key measure is the temporary uplift in the 15% placement capacity under Listing Rule 7.1 to 25%, subject to the following conditions:
- The extra capacity is limited to one placement of fully paid ordinary securities;
- An entity taking advantage of the extra capacity must also undertake a follow on pro rata entitlement offer or SPP at the same or a lower price than the placement;
- Entities that have the extra 10% placement capacity under Listing Rule 7.1A must elect to utilise either that capacity or the temporary extra capacity, not both; and
- For entities undertaking a follow on SPP, the sizing and pricing requirements for SPPs have been relaxed, but the $30,000 cap per security holder continues to apply.
Other temporary measures announced by ASX include:
- The Class Waiver includes the normal ‘supersize’ waiver ASX grants to entities undertaking a placement followed by an accelerated pro rata entitlement offer without the need to apply for a separate waiver;
- The ability to request two consecutive trading halts (2+2) to consider, plan for and execute a capital raising; and
- A waiver of the one-for-one cap on accelerated and standard non-renounceable entitlement offers.
Upcoming AGMs and financial reporting
ASIC will be taking a ‘no action’ approach in respect of public entities with a 31 December balance sheet that do no hold their AGM by the 31 May 2020 deadline, allowing these entities until 31 July 2020 to comply.
ASIC has encouraged entities to adopt processes for hybrid and virtual AGMs to ensure all security holders can still participate in meetings. ASX has endorsed this position and advised those entities that have already dispatched a notice of meeting to consider providing supplementary information to security holders on electronic meeting and voting procedures.
ASX will consider applications for an extension of the deadlines for filing financial statements on a case-by-case basis. Any such requests will generally only be granted where there has been an unavoidable delay in having financial statements audited or reviewed.
Further details of these measures can be found here.
This publication covers legal and technical issues in a general way. It is not designed to express opinions on specific cases. It is intended for information purposes only and should not be regarded as legal advice. Further advice should be obtained before taking action on any issue dealt with in this publication.