Services

HG Corporate Advisory and Governance Alert: New rights issue timetables - 15 April 2014

Recent changes to the ASX Listing Rule prescribed timetables for rights issues will allow companies to raise capital more quickly by providing for:

  • a shortened timetable for traditional rights issues; and
  • new standard timetables for accelerated rights issues.

The changes came into effect on 14 April 2014 and the new timetable for traditional rights issues will apply to rights issues with a record date on or after 22 April 20141.

In this Alert, Partner Michael Hansel and Associate Katherine Hammond set out the key changes that will impact companies looking to undertake a rights issue.

Key points

  • The ASX has reduced the standard timetable for renounceable and non-renounceable traditional rights issues from 26 business days to 19 business days.
  • The ASX Listing Rules now contain new timetables for various classes of accelerated rights issues. These range from 18 to 22 business days.
  • Changes to the timetables for both traditional and accelerated rights issues under the ASX Listing Rules will take effect from 14 April 2014.
  • The introduction of these new timetables will mean that companies can now undertake accelerated rights issues without needing to apply for waivers of various Listing Rules.

Rationale for changes

The ASX has identified the importance of maintaining rights issues as a feasible capital raising mechanism, and initiated a consultation process in July 2012 in relation to the timetables for traditional rights issues and new timetables for accelerated rights issues. The new timetables seek to provide companies with flexibility in raising capital under a rights issue.

Traditional rights issues

The ASX has shortened the timetable for traditional rights issues by making the following changes:

 Accelerated rights issues

The ASX has also implemented standard timetables for the following varieties of accelerated rights issues:

  • accelerated non-renounceable entitlement offers (ANREO);
  • accelerated renounceable entitlement offers (AREO) and simultaneous accelerated renounceable entitlement offers (SAREO); and
  • accelerated renounceable entitlement offers with retail trading rights (AREORT).

The timetables are consistent with the timetables that the ASX previously considered acceptable when companies sought to undertake an accelerated rights issue. However, the introduction of these new timetables will mean that companies can now undertake accelerated rights issues without needing to apply for waivers of various Listing Rules. This will speed up the capital raising process and remove the administrative burden of applying for waivers.

Further reductions

The ASX has expressed interest in reducing the timetables even further, and has foreshadowed that time can be saved by allowing electronic dissemination of documents and incorporating a real-time payment mechanism. However, as implementation of such processes still requires further review, ASX has indicated that it is unlikely that timetables will be reduced further before the end of 2016.

New timetable - traditional renounceable and non-renounceable rights issues

New timetable - accelerated renounceable and non-renounceable rights issues

For further advice in relation to rights issues and the new timetables, or for assistance in conducting a rights issue or capital raising, please contact HopgoodGanim’s Corporate Advisory and Governance team.

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