26 Jul 2012
Company Secretary’s Update - New ASX Placement Rules
ASX yesterday announced the introduction of a new Listing Rule 7.1A which will become effective on 1 August this year.
The new Rule will permit companies that have a market capitalisation of $300 million or less and which are not included on the S&P/ASX300 Index to obtain shareholder approval at an Annual General Meeting to issue an additional 10% of its share capital (over and above the 15% currently permitted by Listing Rule 7.1) in the ensuing 12 month period.
The company may then elect to issue shares under Listing Rule 7.1 or 7.1A.
The shareholder approval must be by way of a special resolution and there are additional disclosure requirements for the meeting materials. These include the risk of dilution to existing ordinary shareholders, the allocation policy for issues and the potential purposes for which these shares may be issued.
The shares must not be issued at a price less than 75% of the VWAP of the shares over the 15 trading days prior to the date on which the issue price is agreed or the issue date (if the shares are issued more than 5 trading days after the price is agreed).
When it announces a placement under the new Listing Rule 7.1A, the company must disclose why it undertook the capital raising by way of placement rather than an entitlement issue.
Further, additional information is required to be disclosed in the Appendix 3B each time shares are issued under the approval, including the dilutionary effect of the placement.
With the Annual General Meeting season approaching, eligible companies should consider seeking shareholder approval for such a resolution to give them added flexibility to raise capital by way of placement in what is currently a tough market.