AUS
NZ
UK
CA
USA
IND
The bearish waves amidst the burgeoning uncertainty coupled with demand crunch and supply chain disruption have left the listed companies appalled as they struggle to sustain their operations. Despite the range of initiatives taken by the authorities, the growing turbulence driven by Covid-19 is causing massive selloffs in the global equity markets.. While the investors are perplexed regarding the insecurity of the market investment, the companies find ascertaining the future positions as a challenging endeavour.
Amidst current market volatility, both the businesses and investors strive to achieve stability in their financial space. Playing a crucial role in this market uncertainty, ASX has released regulatory relief along with the updated guidance during the pandemic.
The package is for assisting the listed companies in managing the obligations of disclosure while also ensuring that the investors remain informed during the crisis. For dealing with the urgent financial needs, rule flexibility through the capital emergency provisions is offered by the ASX. Meanwhile, ASX also focussed that the retail investors are provided protection and fairness.
The measures in response to Covid-19 were cited to be pragmatic and well-functioning, which are expected to help the capital market of Australia.
With this, let us deep dive into the significant aspects of the package:
Guidance on Disclosure Obligations
The ASX listed entity under the disclosure obligations must immediately reveal information that is expected to impact the value or price of its securities. However, amidst the highly uncertain situation due to coronavirus pandemic the companies are challenged by the disclosure.
In this regard, ASX highlighted that the obligations of the disclosure do not extend to predicting the unpredictable. Unless the companies have a clear and reasonable basis, they are not expected by ASX to make forward-looking statements.
While it is acceptable for the companies to withdraw their guidance, material operations decisions, capital raising, financial difficulty causing the situation, trading halts, voluntary suspension and dividend related decisions needs to be disclosed by the entities.
Capital Raising- Temporary Emergency Relief And Guidance On Fair Treatment
As the impact of the pandemic is pumping the needs of the listed companies to raise capital for sustenance urgently, a temporary emergency capital raising measure was proposed by ASX. The measure would be implemented through class order waivers, which would expire on 31 July 2020 unless extended or removed by ASX.
The two consecutive trading halts request is permitted for the entity, allowing the company to plan, consider and execute a capital raising in a total of 4 trading days in halt. Furthermore, the placement capacity has been uplifted from 15% to 25%.
The companies availing the new Capacity is contingent on there being SPP offer, or follow-on accelerated pro-rata entitlement offer. Under the Temporary Extra Placement Capacity, the listed companies by the class waiver are permitted to do one placement of the fully paid ordinary shares. For more placement, the companies would need to approach ASX individually. The class waiver would remove the usual constraints for SPPs for maximising the company’s flexibility to raise as much as possible.
Concerning the fair treatment in capital raising, ASIC’s expectations are set out and that the directors, when deciding on the structuring and timing of the capital raising must act in the best interest of the entity. In case the class waiver being abused or the listed entity acting unfairly, ASX may withdraw Class waiver’s benefits.
Reporting Reliefs - ASX/NZX Dual-Listed Entities And Other Listed Entities
Following the extension of the deadline for filing financial statements and annual reports by NZX Class Waiver, the dual-listed ASX/NZX companies which are admitted as Foreign Exempt Listings on ASX automatically qualify for extension in deadlines filing. ASX has also extended the reporting deadlines to the substituted NZX class waiver deadlines for dual-listed entities admitted as Standard ASX Listings on ASX.
With reference to the listed entities with the balance date of 31 March, 30 September or 31 December, ASX has yet to decide any major call requesting the deadline extension for filing the financial statement of the full year or the half-year. The request, in this case, would be looked case by case basis.
For listed entities with 30 June or 31 May balance date, ASX would review the situation by engaging with the companies and their auditors to ascertain the need for reporting deadline relief.
Misleading COVID-19 announcements
Amidst the current turbulent environment, many entities were found to be providing misleading claims. The announcements were related to new treatment or cure for the covid-19, having products that kill coronavirus or about the development of the test kits. Many entities in actuality do not have any meaningful association to similar activities that they lodged in the announcement.
Many false claims also included announcements related to the gearing of the manufacturing facilities to produce Covid-19 related products such as hand sanitizer, thermometers, and other medical equipment that are currently running short.
The claims have not been satisfactorily and adequately substantiated by many entities when questioned by ASX. Following this, the entities were prevented from releasing another ASX announcement. Moreover, for the entities that have already released the announcement, ASX forced them to either retract the announcement or make significant amendments to it.
Reiterating the Major Areas
The update also restated the significant areas which were covered in the past releases, thereby focusing on the ASX plan and its expectation from the entities.
In reference to upcoming Annual General Meetings (AGMs), ASX endorses and support the ASIC’s ‘no action’ position. As there is a restriction in large gatherings, ASIC cautioned the companies against holding AGM. The release highlighted that in case the companies are not able to hold AGM considering the given Covid-19 scenario, ASIC will take no action. However, ASIC also had indicated towards utilising technology for conducting the meeting.
Concerning the market announcement, ASX highlighted that the market announcement should be first provided to ASX and the information should not be released to anyone in the market unless it has been supplied to and released by ASX.
For the quarterly flow reports for the quarter ending 31 March 2020, the quarterly reporters were reminded to use the new Appendix 4C or Appendix 5B forms that were published with Listing rule changes which on 1 December 2020 came into effect.
For long term suspended entities, ASX would remove the companies from the ASX list through the new suspended entity policy which was introduced on 3 February 2020.
