The Australian Securities Exchange (ASX) has released an information paper entitled Capital Raising in Australia: Experiences and Lessons from the Global Financial Crisis, which uses the global economic downturn to examine Australian and international capital raising processes.  
 
The paper describes the existing framework for capital raising, the methods used by companies, and how these methods were employed throughout the financial downturn. It reveals that Australian entities in 2009 raised some $106 billion in equity capital.  
 
The paper draws the conclusion that the experience of the past few years demonstrates that the relatively flexible capital raising arrangements that apply in Australia, governed by the Corporations Act and ASX listing rules, have allowed Australian companies to raise significant amounts of equity capital at a time of severe market dislocation. 
 
The strong capital raising performance helped companies strengthen their balance sheets and helped to provide an important buffer against the adverse effects of the economic downturn. A prescriptive capital raising regime may have generated a very different and, possibly, a worst case outcome for some listed companies. 
 
The paper also recommends that it is important for companies, when assessing their capital raising choices, to consider the interests of all their shareholders and communicate the reasons for their decisions to their shareholders. Ultimately, this is a matter for the board who will be held accountable for the decisions made. 
 
 
 
Relevant links 

• Australian Securities Exchange: Capital Raising in Australia: Experiences and Lessons from the Global Financial Crisis