The temporary Class Waiver relief
Earlier this year, ASX introduced two class order waivers (Class Waivers) which implemented temporary emergency capital raising measures. The Class Waivers facilitated the raising of urgently needed capital by listed entities directly affected by COVID-19 as well as those potentially affected by dislocation in the broader market environment. This meant relief could be applied whether or not the entity was directly impacted by COVID-19.
The Class Waivers lifted the 15% limit on placements in listing rule 7.1 to 25%, conditional on the listed entity either making a follow-on pro rata entitlement offer under exceptions 1, 2 and/or 3 of listing rule 7.2 or a follow-on offer to retail investors under an SPP, in each case at the same or a lower price than the placement. The relief also granted a temporary class waiver of the one-for-one cap on non-renounceable entitlement offers in listing rule 7.11.3 covering both accelerated and standard non-renounceable entitlement offers.
The availability of this temporary relief has been extended to 30 November 2020.
Changes to Class Waiver settings
In September 2020, ASX revised the settings for the availability of the temporary relief having regard to the significant stabilisation of market conditions. These amendments have been implemented by two replacement Class Waivers and apply to all relevant capital raisings announced on or after 16 September 2020 and on or before 30 November 2020.
From 16 September 2020, any entity wishing to take advantage of the ASX temporary emergency capital raising relief measures must satisfy the ASX that it is raising capital predominantly for the purposes of addressing the existing or potential future financial effect on the entity as a result of the COVID-19 health crisis, and/or its economic impact, along with satisfying the other conditions set out in the Class Waivers.
ASX retains its ability to withhold the benefit of the Class Waivers for any reason and may still do so where a capital raising appears to have inequitable features for existing security holders, even if it is specifically COVID-19 related and urgently needed.
Issues of securities made under listing rule 7.1 Class Waiver relief cannot be ratified
In the replacement Class Waivers, ASX has clarified that the additional 10% temporary placement capacity under listing rule 7.1 cannot be ratified or replenished under listing rules 7.1 or 7.4.
This applies whether or not a listed entity had in place an additional 10% placement capacity approved by security holders under listing rule 7.1A.
Listed entities that had a valid listing rule 7.1A additional 10% placement capacity and used it to issue shares in the preceding 12 months, rather than the additional 10% temporary extra placement capacity provided for in the Class Waivers, can approve or ratify the issue under listing rule 7.1 or 7.4 in the usual way. However, in that case, the issue must have complied with all of the requirements in listing rule 7.1A, including the pricing constraints in listing rule 7.1A.3.
A listed entity which has a valid listing rule 7.1A additional 10% placement capacity may use that capacity or the additional 10% temporary placement capacity under the Class Waivers but the total number of securities issued under either capacity, or a combination of both, must not exceed 10%.
For further information, please see:
ASX Compliance Updates