ASIC Corporations (Non-Traditional Rights Issues) Instrument 2026/98

Explanatory Statement

ASIC Corporations (Non-Traditional Rights Issues) Instrument 2026/98

This is the Explanatory Statement for ASIC Corporations (Non-Traditional Rights Issues) Instrument 2026/98 (Instrument).

The Explanatory Statement is approved by the Australian Securities and Investments Commission (ASIC).

Summary

1.              Chapter 6D of the Corporations Act 2001 (the Act) regulates the making of offers for the issue or sale of securities and sets out when an offer needs disclosure to investors in a disclosure document. Part 7.9 of the Act regulates the making of offers for the issue or sale of financial products (other than securities) and sets out when an offer needs disclosure to investors through a Product Disclosure Statement (PDS). These provisions also set out certain categories of offers that do not need disclosure.
2.              Sections 708AA and 1012DAA of the Act permit an entity to make an offer of quoted securities and quoted interests without a disclosure document or PDS where the offer is a rights issue (as defined in section 9A), provided that certain conditions are satisfied (disclosure exemption). These provisions were introduced by the Corporations Legislation Amendment (Simpler Regulatory System) Act 2007 to encourage this kind of fundraising in which retail holders can participate as opposed to forms of fundraising that exclude retail holders (e.g. institutional placements).
3.               The provisions reflect the traditional rights issue structure in which the issuer offers existing holders the opportunity to subscribe for new securities or interests in proportion to their holding of securities or interests in that class and the offer is made to all holders on the same terms.
4.              For the disclosure exemption to apply, a rights issue must satisfy the following conditions:
   1.           the offer must be made to all existing holders in a particular class;
   2.           the offer must be made to existing holders in proportion to their holdings;
   3.           the terms of the offer must be the same; and

1.           the issuer must give the market operator a cleansing notice containing certain prescribed information.

1.              Without ASIC relief, a rights issue that does not comply with all of these requirements would need to be made under a disclosure document or PDS.
2.              This Instrument modifies the Act to provide various technical relief in relation to rights issues, including:
   1.            modifications that enable the rights issue disclosure exemptions also to apply to certain non-traditional rights issues, to offers of stapled securities and to certain offers relating to rights issues; and
   2.            modifications of the requirements in the Act dealing with the provision of a notice in relation to a rights issue to the relevant market operator.
3.              The Instrument provides relief, on largely the same terms as ASIC Corporations (Non-Traditional Rights Issues) Instrument 2016/84 (Sunsetting Instrument), which was scheduled to expire under the Legislation Act 2003 on 1 April 2026.

Purpose of the instrument

1.              The market has adapted the traditional rights issue structure in various ways to meet different fundraising needs.  A key example of a non-traditional rights issue is an accelerated rights issue where offers to institutional holders are accelerated to enable the issuer to raise funds more quickly. The offer proceeds in two tranches: institutional and retail.
2.              Certain features of these non-traditional rights issues do not technically comply with the requirements of the disclosure exemption. 

Differences in timing of offer and allotment

1.            Accelerated rights issues may have a different offer period and timing of allotment of the securities or interests to retail and institutional holders. This means that offers will not be made on the same terms and the issuer will not be able to rely on the disclosure exemption.

Disposal of shortfall

1.            Not all securities or interests may be taken up under the initial pro rata offer. Disposal of the resulting shortfall may fall outside the disclosure exemption for technical reasons because the offers are not pro rata and not on the same terms as the initial offer.

Offer to convertible securityholders

1.            Where the rights issue is an offer of ordinary shares, an offer to holders of convertible securities (e.g. convertible noteholders) would fall outside the disclosure exemption because it is not a pro rata offer to holders in the class of ordinary shareholders.

Multiple cleansing notices

1.            Due to the structure of accelerated rights issues with multiple tranches of offers, it is possible that an issuer will have to lodge a number of cleansing notices with a market operator within a short period of time to comply with the disclosure exemption. There is also a further requirement for a cleansing notice under the on-sale exemption in sections 708A and 1012DA for on-sales of the securities or interests issued under the rights issue. Finally, the market operator may require a cleansing notice before the time for lodgement under section 708AA or 1012DAA.

1.          The Instrument provides relief to enable an issuer to rely on the disclosure exemption for a non-traditional rights issue that gives existing holders an equal opportunity to participate and does not compromise investor protection.
2.          The Instrument also gives technical relief in relation to the treatment of foreign holders, offers of stapled securities and rounding of entitlements.

Consultation

1.          ASIC determined that the relief in the Sunsetting Instrument was operating effectively and efficiently and continues to form a necessary and useful part of the legislative framework.
2.          On 24 November 2025, ASIC published CS 36 Proposed remake of relief for fundraising and mergers and acquisitions (CS 36).
3.          On 24 November 2025, ASIC also published an accompanying news item ASIC proposes to remake relief for fundraising and mergers and acquisitions. 
4.          ASIC brought CS 36 to the attention of its external stakeholders through the Corporate Finance Update published November 2025.
5.          ASIC did not receive any submissions about the Instrument in response to CS 36 (which closed 19 December 2025).

Operation of the instrument

1.          The Instrument commences on the later of:
   1.           the day after it is registered on the Federal Register of Legislation; and
   2.           1 April 2026.

Definition of rights issue

1.          The Instrument modifies the definition of rights issue in section 9A to:
   1.            permit issuers to exclude only some of the holders outside Australia and New Zealand;                           
   2.            give issuers greater flexibility in selling rights or securities for the benefit of foreign holders who do not participate in a rights issue (including clarifying that the procedure for sale of rights or securities by a nominee on behalf of foreign holders in section 615 under the takeover exemption for rights issues may be followed in relation to foreign holders);
   3.            permit differences in the offer period and timing of allotment to institutional investors and retail investors, provided that the retail allotment occurs within two months after the institutional allotment;
   4.            permit separate bookbuilds to be conducted for the shortfalls arising from the institutional and retail tranches of a rights issue.  It also allows an offer of the shortfall to be made to existing holders who participated in the offer;
   5.            permit differences attributable to rounding of fractional entitlements to the nearest whole number; and
   6.             permit different entitlements to trade rights (for example under a Pro-rata Accelerated Institutional Traditional (or Tradeable) Retail Entitlement Offer structure).
2.          Subparagraphs 9A(1)(b) and 9A(2)(b) of the definition of rights issue covers offers made to persons because they hold securities in the relevant class.  It does not cover offers made to persons in some other capacity, for example, because they hold securities or financial products which are convertible into securities or financial products in the relevant class.  Accordingly, these other offers do not affect whether the conditions in subparagraphs 9A(1)(b), 9A(1)(c), 9A(2)(b) or 9A(2)(c) are met.
3.          The Instrument also inserts a note to the definition of rights issue in section 9A to clarify that where a rights issue is non-renounceable, the issuer may undertake a sale process for the benefit of foreign holders without impacting on whether the offer satisfies the definition of rights issue in section 9A.

Offer of shortfall

1.          The Instrument modifies sections 708AA and 1012DAA so that shortfall offers will come within the disclosure exemption provided that the initial rights issue itself complied with the disclosure exemption. The shortfall offer may be made to existing holders who were offered securities or interests under the initial rights issue or to persons for whom a disclosure document or PDS is not required. The offer of the shortfall to existing holders must be made no later than two months after the first offer under the rights issue.

Offers to convertible securityholders

1.          The Instrument modifies sections 708AA and 1012DAA so that offers to convertible securityholders will come within the disclosure exemption provided that the rights issue itself complied with the disclosure exemption. Offers to convertible securityholders will only fall within the disclosure exemption where the offers are required under the terms of the convertible securities.  Holders of convertible securities may only participate to the extent necessary to prevent their holdings being diluted.

Cleansing notices

1.          The Instrument modifies sections 708AA and 1012DAA so that a cleansing notice must be given within 24 hours before the first offer is made under a rights issue or by any earlier time required by the market operator.
2.          The Instrument also modifies sections 708A and 1012DA so that the securities or interests that were issued under the rights issue disclosure exemption can be on-sold without the requirement to give the market operator a further cleansing notice that would otherwise be required by paragraphs 708A(5)(e) and 1012DA(5)(e).  The issuer will need to comply with the requirements that the securities or interests were quoted securities at all times in the 3 months prior to issue, consistent with paragraphs 708A(5)(a) and 1012DA(5)(a). 
3.          The effect of these modifications is that an issuer will generally only need to lodge one cleansing notice, unless new information emerges or a defect in the notice is discovered. 
4.          If the issuer becomes aware of any excluded information that would have been required to be disclosed in the cleansing notice or a material change to the potential effect of the issue on control of the issuer or to the consequences of that effect, the issuer is required to give the market operator a cleansing notice that sets out the detail of the information or material change. This requires notices to be updated for new information.

Stapled securities

1.          The Instrument modifies sections 708AA and 1012DAA so that the disclosure exemptions apply to quoted securities that are stapled together.  This is necessary because the disclosure exemptions provided by sections 708AA and 1012DAA apply to ‘quoted securities’, which are defined by section 9 as ‘a security that is quoted on a declared financial market’. This definition does not include stapled securities and, therefore without relief, sections 708AA and 1012DAA would not apply.

Repeal of Sunsetting Instrument

1.          Finally, the Instrument repeals the Sunsetting Instrument (rather than leave it to expire/sunset) to avoid any doubt that it no longer continues in force.

Legislative instrument and primary legislation 

1.          The subject matter and policy implemented by this instrument is more appropriate for a legislative instrument rather than primary legislation because:

(a) The instrument contains technical detail which would otherwise introduce unnecessary complexity to the primary legislation; and

(b) The matters contained in the instrument are a specific amendment designed to ensure the application of primary legislation keeps pace with market developments not contemplated at the time the law was originally made and applies in a way consistent with the intended policy and the enabling provisions in the primary legislation

1.          It will be a matter for the Government and for Parliament as to whether the Act or Regulations may be amended in future to include the relief in the Instrument.

Duration of the instrument

1.          The Instrument will expire after 5 years.

1.          This allows sufficient time for the Government and for Parliament to determine whether to amend the Act or Regulations to include the relief.

Legislative authority

1.          ASIC makes this Instrument under subsections 741(1) and 1020F(1) of the Act.
2.          Subsection 741(1) provides that ASIC may:
   1.           exempt a person from a provision of Chapter 6D; or
   2.           declare that Chapter 6D applies to a person as if specified provisions were omitted, modified or varied as specified in the declaration.
3.          Subsection 1020F(1) provides that ASIC may:
   1.           exempt a person or class of persons from all or specified provisions of Part 7.9; or
   2.           exempt a financial product or a class of financial products from all or specified provisions of Part 7.9; or
   3.           declare that Part 7.9 applies in relation to a person or a financial product, or a class of persons or financial products, as if specified provisions were omitted, modified or varied as specified in the declaration.
4.          Under subsection 33(3) of the Acts Interpretation Act 1901, where an Act confers a power to make, grant or issue any instrument of a legislative or administrative character (including rules, regulations or by-laws), the power is to be construed as including a power exercisable in the like manner and subject to the like conditions (if any) to repeal, rescind, revoke, amend or vary any such instrument.
5.          This Instrument is disallowable under section 42 of the Legislation Act 2003.

Statement of Compatibility with Human Rights 

1.          The Explanatory Statement for a disallowable legislative instrument must contain a Statement of Compatibility with Human Rights under subsection 9(1) of the Human Rights (Parliamentary Scrutiny) Act 2011. A Statement of Compatibility with Human Rights is in the Attachment.

Attachment

Statement of Compatibility with Human Rights

This Statement of Compatibility with Human Rights is prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.  

ASIC Corporations (Non-Traditional Rights Issues) Instrument 2026/98

Overview

1.              Sections 708AA and 1012DAA (rights issue disclosure exemptions) of the Corporations Act 2001 (the Act) permit an entity to make an offer of quoted securities and quoted interests without a disclosure document or PDS where the offer is a rights issue (as defined in the Act), provided that certain requirements are satisfied. This instrument modifies the Act to provide various technical relief in relation to rights issues, including:

1.           modifications that enable the rights issue disclosure exemptions also to apply to certain non-traditional rights issues, to offers of stapled securities and to certain offers relating to rights issues; and

1.           modifications of the requirements in the Act dealing with the provision of a notice in relation to a rights issue to the relevant market operator.

Assessment of human rights implications

2. This instrument does not engage any of the applicable rights or freedoms.  

Conclusion

3. This instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.