The temporary emergency capital-raising relief measures implemented by the Australian Securities and Investments Commission (ASIC) and Australian Securities Exchange (ASX) to help companies during the COVID-19 pandemic severely disadvantaged SMSFs and retail investors, the SMSF Association has said.
SMSF Association chief executive John Maroney said the relief, which came into effect at the end of March and helped companies raise urgently needed capital by allowing the 15 per cent placement capacity to be lifted to 25 per cent, had advantaged large institutional investors and penalised existing SMSF and retail shareholders.
“I think a lot of SMSF investors have potentially missed out. Based on the statistics at the end of last year, they have holdings of over $200 billion in ASX-listed companies and so if you’re missing out on potential for substantial raises there, if you’re suffering dilution, that is a significant impact on people’s savings,” Maroney said today during an SMSF Association webinar.
“We know companies need to raise capital relatively quickly, but it’s a question of how they can do that in a way that acts in the best interests of all their stakeholders and shareholders, and the company as a whole.
“Yes, we want all the companies to survive as best they can. It’s a question of how do we do that as fairly as can be done.”
One way the current imbalance could be improved was by requiring companies to structure their offers to maximise access for all investors on a proportional offer, including setting aside a certain allocation for retail-focused brokers to offer to retail and SMSF clients, he noted.
“If those SMSF and retail clients own 30 per cent of the company, they should have access to 30 per cent of the share raising in one way or another. If a company doesn’t do that, then they need to explain publicly why that wasn’t the case,” he said.
He also pointed out publicly available data from both ASIC and the ASX regarding the implementation of the emergency capital-raising relief measures was essential.
“Part of the relief was that the companies had to explain to ASIC what they were doing, but that was on a private disclosure. I would certainly like to see ASIC publish some summaries of that. I think it would be very interesting for researchers,” he added.
“It would be great to get more data out for the regulator, and from ASX, so that there’s greater public transparency [and] we can see what has been happening and whether things can be done differently.”
Earlier this year, the association in conjunction with the Financial Services Council also questioned the lack of access to infrastructure investment for SMSF investors and called for the development of liquid investment vehicles to create that access.
