ASIC has remade its class order that provides ASX-listed issuers of shares and interests under purchase plans with relief from the requirement to prepare a disclosure document on substantially similar terms to the previous instrument, while increasing the participation limit (for each registered holder in a 12 month period) from $15,000 to $30,000. The previous restrictions on the price at which shares or interests can be offered under the ASX Listing Rules and class order continue to apply.
ASIC Corporations (Share and Interest Purchase Plans) Instrument 2019/547 supersedes its predecessor Class Order [CO 09/425], and came into effect on 29 August 2019. The increase in the shareholder participation limit follows an ASIC consultation period requesting feedback on its preliminary view that the $15,000 should remain unchanged. After reviewing submissions to its consultation paper, ASIC has determined that the participation limit should be increased to $30,000 per shareholder.
ASIC’s rationale for increasing the monetary limit to $30,000 is that:
- it will facilitate retail participation in discounted secondary offers
- it is necessary in the context of inflation and increasing market capitalisation of entities listed on the ASX
- the requirement of an issuer to comply with its continuous disclosure obligations and notify the market of certain excluded information by lodging a cleansing notice with the ASX mitigates some of the risks of not having a prospectus or a PDS
- the benefits of the increased monetary limit such as cost saving and flexibility outweigh the disadvantages and risks of not having a prospectus or a PDS.
This means ASX-listed companies and managed investment schemes now have the opportunity to potentially raise double the amount of funds under a purchase plan than they could previously raise (subject to the cap under the Listing Rules of 30% of the existing share capital), which we expect will make purchase plan offerings a more attractive option for ASX-listed entities.