Disclosure Relief for Foreign Companies when Raising Capital in Australia

Key takeaways

• There is a variety of relief from the prospectus requirements under the Act available to foreign companies wishing to raise capital in Australia.
• This relief is in addition to the normal statutory exceptions in the Act.
• In most cases, the foreign company must be listed on an ‘approved foreign market’.

Introduction

Generally, foreign companies offering securities in Australia need to comply with the prospectus provisions in the Corporations Act 2001 (Cth) (the Act). However, in addition to the normal statutory exceptions that may apply to an offer of securities, ASIC has issued specific conditional relief for certain offers of foreign securities. This relief gives greater choice to foreign companies to extend capital raisings to Australian investors who might otherwise be excluded due to the compliance costs involved with meeting the regulatory requirements of multiple jurisdictions.

Specifically, there is conditional relief for:

1. rights issues by foreign companies where the securities are in the same class as those already held by Australian investors;
2. foreign entities making 20 or fewer offers in Australia in any 12 month period; and
3. foreign scrip bids and schemes of arrangement.

Most of the relief is only available where the relevant foreign securities are quoted on an ‘approved foreign market’. ASIC updated its list of ‘approved foreign markets’ in August 2017 to include Euronext Brussels and Euronext Lisbon, taking the number of ‘approved foreign markets’ to 19 securities exchanges across the world.

Types of disclosure relief available to foreign companies

The following is summary of the key disclosure relief which ASIC has granted for offers of foreign securities:  

What is an ‘approved foreign market’?

There are currently 19 securities exchanges across the world which are ‘approved foreign markets’, including Euronext (Amsterdam, Brussels, Lisbon and Paris), the Hong Kong Stock Exchange, the London Stock Exchange, the JSE, the NASDAQ Global Market, the New York Stock Exchange, the Singapore Exchange and the Toronto Stock Exchange.

These markets (and the others included on the ‘approved foreign market’ list) are considered to be comparable to ASX in terms of being fair, efficient, well-informed and internationally competitive. ASIC will accept applications for additional foreign markets to be included in the list.

Is there any other relief which may be relevant?

• Advertising and publicity: There is relief available for advertising and other notices relating to foreign securities that are aimed at a foreign market and only incidentally published in Australia.
• Foreign employee incentive schemes: There is conditional relief available for foreign companies that offer Australian employees securities as part of an employee incentive scheme.
• Mutual recognition schemes: There is a mutual recognition scheme with New Zealand which provides for trans-Tasman mutual recognition of offers of securities or interests in collective or managed investment schemes in both countries.
• Licensing: There is a variety of AFS licensing exemptions and relief which may be relevant to a foreign company providing financial services (including the giving of general advice) in Australia. However, this is a complex area and advice should be sought about any licensing obligations and exemptions before making offers to Australian investors.