In a Compliance Update released on 31 March 2020, ASX has sought to outline its response to COVID-19 and a number of temporary measures aimed at assisting listed entities.  These measures, to a certain degree, support measures previously announced by ASIC.

Continuous disclosure obligations

ASX has confirmed they do not expect listed entities to make disclosures seeking to predict the impact of COVID-19, noting the usual carve out for matters of supposition or those that are insufficiently definite can continue to be relied upon.  However, ASX was clear to remind listed entities that they must continue to observe their usual obligation to disclosure information a reasonable person would expect to have a material effect on the price or value of the entity’s securities.

ASX has also offered some practical guidance on disclosure obligations, including:

  • Entities should review any earnings guidance issued prior to the outbreak of COVID-19 and if no longer current either update or withdraw the guidance.
  • Entities should update the market in respect of any material operating decisions likely to have a material effect on the price or value of the entity’s securities.
  • Any capital raising an entity seeks to undertake must be announced to the ASX as soon as the entity is committed to proceeding with the raising.
  • Entities in financial difficulty must continue to strictly observe their continuous disclosure obligations and promptly announce any material developments to ASX (e.g. a resolution of the board to appoint an administrator).
  • Entities must announce any decision not to pay a dividend or distribution either previously announced or that the entity had paid or distributed in the prior corresponding period.
  • Where an entity becomes aware of material information requiring disclosure and before it gives an announcement to ASX for release to the market, it should carefully consider whether it is appropriate to request a trading halt or voluntary suspension.

Temporary emergency capital raising relief

ASX has put in place several short term Class Waivers to assist entities that may need to raise emergency capital in response to the effects of COVID-19.  The Class Waivers will expire on 31 July 2020, unless ASX decides to remove or extend them.

Perhaps the most important measure announced for listed entities is the temporary uplift in the 15% placement capacity under Listing Rule 7.1 to 25% (Temporary Extra Placement Capacity).  Any entity that seeks to take advantage of the Temporary Extra Placement Capacity must also undertake a follow on accelerated pro rata entitlement offer or SPP at the same or a lower price than the placement.  The Temporary Extra Placement Capacity comes with a number of conditions and restrictions:

  • Temporary Extra Placement Capacity is limited to one placement of fully paid ordinary securities, anything outside this scope will require a waiver from ASX.
  • Entities that have the extra 10% placement capacity under Listing Rule 7.1A must elect to utilise either their 7.1A capacity or the Temporary Extra Placement Capacity when undertaking a placement, not both.
  • The Class Waiver includes the normal ‘supersize’ waiver ASX grants to entities seeking to undertake a placement followed by a pro rata entitlement offer.  Entities will not be required to apply for a separate waiver.
  • For entities that decide to undertake an SPP following the placement, the Class Waiver will remove the sizing and pricing requirements for SPPs under exception 5 of Listing Rule 7.2, instead providing that the SPP offer price is equal to or lower than the preceding placement.  ASX and ASIC are yet to provide clarification for whether entities that have already undertaken an SPP in the last 12 months will be able to utilise the SPP option in the context of the Temporary Extra Placement Capacity.  SPPs undertaken independent of a placement will also be subject to the same Class Waiver as follow-on SPPs.  The $30,000 cap per security holder continues to apply. 

ASX also took the opportunity to confirm it is aligned with ASIC’s guidance on the fair treatment in capital raisings released on 31 March 2020, noting that directors must ‘continue to act in the best interests of the entity when deciding on the timing and structuring of any capital raising’.  To the extent that ASX believes a listed entity is acting inconsistent with ASIC’s guidance when undertaking a capital raising, it will withdraw the benefit of the Class Waivers for that entity.

Two other measures announced by ASX in respect of the temporary emergency capital raising include:

  • Ability for entities to request two consecutive trading halts (2+2) to consider, plan for and execute a capital raising.  Entities requiring back-to-back trading halts may specify this in their request to ASX.
  • A temporary waiver of the one-for-one cap on accelerated and standard non-renounceable entitlement offers.  While this restriction is lifted for the time being, entities must still make a fair and reasonable assessment against its capital requirements when determining the ratio for any pro rata offer.

Upcoming AGM’s and financial reporting relief

ASIC announced on 20 March 2020 that it would be taking a ‘no action’ approach in respect of public entities with a 31 December balance sheet that did no hold their AGM by the 31 May 2020 deadline, allowing these entities until 31 July 2020 to comply.  Further, 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 the position adopted by ASIC and advised that those entities that have already dispatched a notice of meeting to consider providing supplementary information to security holders on electronic meeting and voting procedures via the entity’s website or the ASX market announcements platform.

For entities with dual listings on the ASX and NZX, ASX has published new relief to reflect the extended deadlines for filing of financial statements and annual reports granted to NZX listed entities by the New Zealand Financial Markets Authority and NZX Regulation.

ASX has also provided initial information on reporting relief for listed entities with a 30 September, 31 December or 31 March balance date, noting that it will consider applications for relief on a case-by-case basis.  For these entities, ASX may consider an extension of the entity’s deadline for filing its reviewed half yearly or audited annual financial statements where:

  • ASIC (or the equivalent corporate regulator for overseas companies) has agreed to grant the entity an extension to the relevant reporting deadline under the Corporations Act (or overseas equivalent legislation);
  • The entity’s auditor has confirmed in writing to ASX that they will not be able to complete their audit or review of the entity’s financial statements by the deadline in chapter 4;
  • In the case of annual financial statements, the entity has released an Appendix 4E (Preliminary Final Report) with unaudited financial results for the financial year; and
  • In the case of half yearly financial statements, the entity has released unaudited and unreviewed financial results for the half year.

This relief granted by ASX would be conditional on the entity:

  • announcing to the market the date by which it reasonably anticipates being able to lodge its audited or reviewed financial statements with ASX (as applicable);
  • confirming to the market that it is in compliance with its disclosure obligations under listing rule 3.1; and
  • immediately notifying ASX if there is a material difference between its unaudited results and it’s audited or reviewed financial statements.

Need help?

If you require assistance or any further information on issues raised in this alert, please contact:

  • Reece Walker on +61 412 657 535
  • Aaron Dahl on +61 419 174 449
  • Ben Wood on +61 416 820 423