Today BRR Media speaks with Ebony Bishop; she’s a Senior Associate at Price Sierakowski in Perth, welcome to BRR Media Ebony.

Hi David, thanks for having me.

Ebony small to mid-cap listed companies now have a little more head room to raise extra capital following changes to the ASX Rules, which kicked off recently.

Yeah David, ASX have introduced Listing Rule 7.1A and essentially this allows mid to small cap listed entities to place an additional 10% of their share capital within a 12 month period, this is in addition to their existing capital raising rights.

So which companies are eligible and what’s the approval process?

The entities which are eligible for this additional placement essentially needs to satisfy two criteria.  Firstly they must have a market cap of $300 million or less, and secondly they must not be included in the S&P ASX 300 index and this is at the time the AGM is held.  In terms of approval required ordinary shareholders must pass a special resolution at the AGM and once they pass this resolution the approval is valid for a 12 month period.

So Ebony you talk about it being an AGM that has to happen and given that AGMs only happen once a year, and with November being the main season for AGMs, do companies need to start planning for approval now, even though they may not need the extra capital right now?

Oh yeah definitely, I think companies should start planning now.  I mean this approval lasts for 12 months which is quite a unique feature for the Listing Rules, so they don’t have to think about using it straight away they’ve got 12 months and if they don’t use it then there’s no loss they really can take advantage of this additional right.

And with the approval process I was looking at that it does seem you know rather lengthy, so given that speed is generally of the essence with placements, do you think many companies will use this extra capacity?

I think a lot of the small to mid-cap companies will utilise this extra capacity, ASX have found that in 2011 70% of the secondary capital raising requirements came from placements.  So there’s a small amount of administration to go through, but I think it provides these entities with the extra flexibility to raise capital in addition to their existing rights; I think they will definitely use it.

Well we’ll certainly look forward to seeing what comes at this November’s AGM season, and thanks again for the update today Ebony.

Thanks David.

That was Ebony Bishop, a Senior Associate at Price Sierakowski, she’s based in Perth and listeners if you have any questions for Ebony about this interview please send a message using the panel that’s on your screen or you can otherwise email through to law@brrmedia.com and we’ll forward your query.