When ASX-listed companies want to raise extra capital, they general offer bulk shares to 'institutional' investors at below the market rate. ASIC has increased the amount that existing shareholders can buy from $15000 to $30000.
Why is there a need for this level of control? Why not simply allow the company to issue extra shares in a transparent fashion and sell them on the market? The company would probably get more money that way, because they would presumably get a higher price, and they could take their time doing it. And it would mean that existing investors and non-shareholders looking to invest do not get "ripped off" because some people have access to buying shares at below market value.
There seems to be a fair bit of capital raising happening right now, some of it to overcome liquidity issues resulting from COVID19.
https://smallcaps.com.au/asic-increases-investor-participation-share-purchase-pl
ans/
Quote:The new ASIC Corporations (Share and Interest Purchase Plans) Instrument 2019/547 provides ASX-listed issuers of shares and interests under purchase plans with relief from the requirement to prepare a prospectus or product disclosure statement if certain conditions are met.
In addition, the participation limit for each registered holder in a 12-month period has been increased from $15,000 to $30,000.
ASIC commissioner John Price said the increase in the purchase plan limit will “help ‘mum and dad’ investors participate in discounted fundraisings, and further supports the efficient functioning of capital markets”.
Corporate advisory firm Bridge Street Capital Partners declared its support of the move, with executive director Alex Sundich telling Small Caps it “gives small investors a much fairer go”.
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