Legislation update

Key issues:

• ASIC updates class order under which a share purchase plan (SPP) meeting certain stipulations can avoid disclosure requirements.
• A new increased participation limit of $30,000 is set for each registered holder every year (previously $15,000), doubling the amount that can be raised under an SPP.

The previous class order

ASIC has remade the relief in Class Order [CO 09/425], which was due to sunset on 1 October 2019. Under that class order, ASX-listed issuers of shares and interests under purchase plans were given relief from the requirement to prepare a prospectus or product disclosure statement if certain conditions are met.  Those conditions included (but were not limited to):

1. the shares being offered were in a class quoted on the ASX and not having been suspended for trading for more than five days in the previous 12 months;
2. the offer was made to each registered holder of shares or interests in the class and was non-renounceable;
3. the issue price of the shares or interests was less than the market price of the shares or interests during a specified period in the 30 days before either the date of the offer or the date of the issue;
4. the offer document contains certain information, such as the method used to calculate the issue price of shares offered under the purchase plan and the time when that price will be determined; and
5. the total application price for the shares or interests acquired by a registered holder in any 12 month period did not exceed $15,000.

The new legislative instrument

Class order [CO 09/425] has, as of 29 August 2019, been replaced by a new legislative instrument.  The new instrument, ASIC Corporations (Share and Interest Purchase Plans) Instrument 2019/547, will continue the effect of the previous class order, while increasing the participation limit (for each registered holder in a 12-month period) from $15,000 to $30,000.

This means that companies can potentially raise double the amount of funds under a purchase plan than they could previously.

There has been no other significant change to the conditions a purchase plan must meet to be eligible for relief under legislative instrument 2019/547.

Further information, including a copy of the new legislative instrument, can be found here.

If you have questions about raising funds under a share purchase plan, or if you would like to discuss capital raising further, please contact HopgoodGanim Lawyers’ Corporate Advisory and Governance team.