ASIC Corporate Finance Update (December 2020): COVID-19 Landscape


On 2 December 2020, the Australian Securities and Investments Commission (ASIC) released the third issue of its Corporate Finance Update for 2020, which notably focuses on and highlights various measures that itself and other key regulators are continuing to take as a result of COVID-19.

Therefore, despite Australia seemingly getting on top of COVID-19 and heading toward a 2021 that may not be governed by the pandemic, it is integral for companies and businesses to be aware of the relief and measures that remain available in response to COVID-19, many of which are here to stay for at least the early part of 2021.

Some of these key measures are highlighted below.

Extension of relief for ‘low doc’ offers

On 31 March 2020, ASIC announced that it had made amendments to both the ASIC Corporations (Share and Interest Purchase Plans) Instrument 2019/547 and ASIC Corporations (Trading Suspensions Relief) Instrument 2020/289. The effect of these amendments is to enable entities to undertake ‘low doc’ offers to raise capital without a prospectus (including through entitlement offers, share purchase plans and placements), even if they do not meet all of the typical requirements.

These amendments were due to be repealed on 2 October 2020. They have now been extended to operate until 1 January 2020.

Under the relief, entities are able to make a ‘low doc’ offer if:

  • they have been suspended from trading for up to 10 days in the 12 month period before the offer; and
  • they were not suspended from trading for more than 5 days in the period commencing 12 months before the offer and ending 19 March 2020 (the time when the Australian Government announced its advice: ‘do not travel’ overseas).

Without this relief, some listed entities would invariably be prevented from conducting a ‘low doc’ offer because they have been suspended for a prolonged period while undertaking assessment of the impact of COVID-19 on their business and preparing for a capital raising. ASIC has extended this relief given the continuing uncertain impact of COVID-19 in Australia.

Section 444GA share transfer transactions

Pursuant to section 444GA of the Corporations Act 2001 (Cth) (Corporations Act), the shares of a company in administration can be transferred by an administrator as part of a deed of company arrangement, with permission from the court or consent from the holders of the shares.

Where a transfer of this nature will result in a person acquiring a relevant interest above 20% of the voting shares in a company (being a listed company or an unlisted company with more than 50 members), which would otherwise constitute a contravention of section 606 of the Corporations Act (takeover provisions), relief must first be applied for and granted by ASIC.

Due to a high volume of applications for relief involving section 444GA, ASIC has recently provided updated guidance outlining when it will provide such relief.

The updated guidance explains that in order to grant relief, ASIC will generally require that:

  • explanatory materials are provided to shareholders of the entity, including an independent expert’s report, which provides an independent view on whether there is any residual equity left for shareholders; and
  • the independent expert’s report is prepared by a suitably qualified expert who meets ASIC’s independence requirements (importantly, it should not be prepared by the administrator(s)).

The application for relief and independent expert’s report, as well as the other explanatory materials that will go to shareholders, should be provided to ASIC at least 14 days before the date they are to be despatched. If ASIC is satisfied with the materials, it will provide in principle relief, which will be subject to the court granting formal permission to the administrator to proceed with the transfer.

Amendment to annual general meeting ‘no action’ position

Historically, pursuant to section 250N of the Corporations Act, a public entity must hold its annual general meeting (AGM) within 5 months of the end of its financial year.

In March 2020, in response to COVID-19, ASIC adopted a ‘no action’ position whereby it would not penalise entities that did not adhere to this requirement, provided that they instead held their AGMs within 7 months of their financial year end. This was particularly beneficial for entities with a financial year ending 31 December 2019, enabling them to host their AGM up to the end of July 2020.

On 11 November 2020, ASIC announced that it had amended this no action position by extending it to apply to entities that have a financial year end up to 7 January 2021. Therefore, entities with a financial year end up to 7 January 2021, will be not be required to host their AGMs within 5 months of that date, but instead within up to 7 months.

The purpose of this relief is to provide entities with additional time to prepare for and hold their AGMs in light of possible continuing restrictions on large gatherings, travel restrictions and other COVID-19 safety related concerns that members may have.

Entities should also keep in mind that they are permitted to conduct their AGMs electronically via virtual technology, as well as send notices to shareholders electronically. See our previously published article covering this here.

Continuous disclosure obligations

On 23 September 2020, the Treasurer announced that the Government will continue to provide regulatory relief for businesses and entities impacted by COVID-19, by extending the temporary continuous disclosure provisions that were introduced by the Corporations (Coronavirus Economic Response) Determination (No. 2) 2020. The temporary provisions have been extended to apply to entities and their officers until at least 23 March 2021.

Under these provisions, the continuous disclosure obligations in sections 674, 675 and 677 of the Corporations Act have been modified to introduce a ‘knowledge, recklessness or negligence’ threshold to contravention of the existing disclosure obligations.

Notably, companies and directors will now only be held liable for a breach of their continuous disclosure obligations if they had knowledge or acted recklessly or with negligence when providing updates on price-sensitive information and other financial forecasts to the market.

These changes are designed to reduce the scope for companies and their directors to be found liable for a breach of their continuous disclosure obligations if financial forecast information and price sensitive information released to the market turns out to be inaccurate in this uncertain climate, provided that companies and directors don’t have knowledge or act recklessly or with negligence in respect of the release of such information.

These changes will make it difficult for class actions to be brought against company directors and executives, while assisting the market to continue to stay adequately.


You can read the full ASIC Corporate Finance Update here or subscribe to receive future updates directly from ASIC here.

For further information please contact the author, or any member of our Corporate & Commercial team.


This information and the contents of this publication, current as at the date of publication, is general in nature to offer assistance to Cornwalls’ clients, prospective clients and stakeholders, and is for reference purposes only. It does not constitute legal or financial advice. If you are concerned about any topic covered, we recommend that you seek your own specific legal and financial advice before taking any action.