The Australian Securities and Investments Commission (ASIC) is providing relief to enable companies to launch offerings even when they don’t meet the usual standards during the Covid-19 outbreak.
ASIC said that it will provide temporary relief to enable companies to raise capital through so-called “low doc” offerings, such as rights offerings, private placements and share purchase plans.
The regulatory relief will allow “low doc” offerings by companies that have been suspended for up to 10 days.
Under the existing rules, companies would have to use a full prospectus to raise capital, if they’ve been suspended for more than five days in the previous 12 months.
ASIC said that companies may be prevented from using these sorts of capital-raising mechanisms because they have been suspended while assessing the impact of Covid-19 on their business.
“We want to give companies more fundraising flexibility in these circumstances. Many will need to seek a trading suspension to understand how Covid-19 will affect them and to put a capital raising in place,” said ASIC commissioner John Price.
The initiative stems from ASIC’s pledge to focus its regulatory efforts on challenges created by the pandemic.
“However, the usual rules still apply,” Price added. “Directors need to ensure the capital raising is in the best interests of the company and companies need to make sure they are keeping the market informed via continuous disclosure announcements, even when they are in suspension.”