Raising equity capital during the COVID-19 pandemic in Australia: the efficacy of regulatory interventions

Australian regulators acted early at the onset of the COVID-19 pandemic in 2020 to grant companies temporary capital raising relief, in order to facilitate capital raisings and strengthen balance sheets. One important change to regulations was to allow (without shareholder approval) companies to increase the existing 15% placement capacity to 25% of base capital. We first document current regulations governing the issuance of equity capital for public companies in Australia, and then describe the changes made to regulations in response to the crisis caused by the COVID-19 pandemic. Analysing the effect of the regulatory changes on company equity issuance choices, both qualitatively and quantitatively, we conclude that the changes introduced by ASIC and the ASX had both a direct and an indirect impact on company choices during 2020.