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Capital Raising Standard Confidentiality Agreement
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The desirability of a standard form confidentiality agreement for capital raising in Australia, which is ideally put in place between advisers and the clients in advance of settling other terms of their engagement so that the confidentiality obligations and potentially related issues such as conflicts of interest are in place at or near the start of a transaction, has been recognised by the Australian Securities and Investments Commission. To assist the market this Standard Form Capital Raising Confidentiality Agreement was developed by AFMA's Capital Raising Committee to guide the market with a standard set of terms.
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Standard Form Arrangement Letter for International (excluding US) Debt Offers
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In connection with the due diligence process for many international debt offers, accounting firms are requested to prepare a "comfort letter" addressed to the underwriters and the issuer's board of directors. Since 2003, certain accounting firms have sought comparable arrangement letters in connection with international debt offers by Australian Issuers and, in more recent years, have sought to broaden the scope of such letters. Because the negotiation of arrangement letters can consume undue amounts of time and expense (legal and accounting fees) in some transactions a Standard Form Arrangement Letter for International (excluding US) Debt Offers has been developed through consultation among major investment banks, major law firms and major accounting firms. This form is designed for use in connection with offers of debt securities by Australian issuers outside the United States.
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Due Diligence Planning Memorandum
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The AFMA Due Diligence Planning Memorandum (DDPM) is an industry standard due diligence process document designed for the offer of ordinary shares in an initial public offering (IPO) under an Australian law Corporations Act compliant prospectus. The document aims to assist issuers and their advisers by setting out a roadmap for the establishment of a due diligence committee and the implementation of a due diligence process for an IPO. However, ultimate responsibility rests with the issuer for the conduct of due diligence, sign-offs/reports and opinions provided by Reporting Persons, compliance with legal and regulatory disclosure requirements and the possible availability of due diligence defences.
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Master Equity Capital Market Terms
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The Master Equity Capital Market (ECM) Terms provide industry developed standard terms to streamline the confirmation of institutional allocations on capital raisings in Australia.
The Master ECM Terms were developed by the AFMA ECM Legal Committee and first published in 2010 to provide a simple and effective means of confirming institutional allocations on equity capital raisings. Since that time they have become very widely accepted as the industry standard. AFMA is confident that the Master ECM Terms will benefit clients, institutional investors and joint lead managers through streamlining and simplifying the confirmation of allocation process, resulting in time and cost savings.
On 9 November 2023 amendments made by the Treasury Laws Amendment (More Competition, Better Prices) Act 2022 to the Australian Securities and Investments Commission Act 2001 (ASIC Act) came into effect with regard to the unfair contract terms provisions and in particular the definition of ‘small business’, which extends the law and the consequences for breaching the UCT provisions. The Master ECM Terms have not been drafted for dealings with a ‘small business’ and others covered by the UCT provisions in mind. Users should seek their own legal advice with regard to use of the Master ECM Terms in compliance with the law. A warning has been placed on the cover page of the Master ECM Terms to remind users to take account of the UCT provisions
AFMA member firms which collaborated in the development of the terms were Macquarie Capital Advisers, RBS, Bank of America Merrill Lynch, Commonwealth Bank, Credit Suisse, Deutsche Bank, Goldman Sachs, JP Morgan Chase Bank, Macquarie Group Limited, UBS, with support from the law firms Rimon Law, Allens, Baker & McKenzie, Ashurst, Clayton Utz, Herbert Smith Freehills, King & Wood Mallesons, Sidley Austin, Skadden, Arps, Slate, Meagher & Flom and Sullivan & Cromwell. The ECM Legal Committee maintains the Terms with a regular six month review process and the Terms are updated as required to take account of developments in the law.
Archived versions of the Master ECM Terms are available for download here.
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Information for Issuers on IPO transactions
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The Australian Securities and Investments Commission (ASIC) has published Regulatory Guide 264 (Sell Side Research) (RG 264) which provides ASIC's guidance on its expectations as to how Australian Financial Service Licensees, should manage certain potential conflicts of interest situations and handle inside information as it relates to research analysts and sell-side research.
To assist market understanding of these regulatory expectations an information page is provided here which outlines some of an issuer's and its advisers’ key obligations throughout an IPO.
In support a document is also provided which contains important notices that an AFS licensee is required to provide to an issuer of financial products in connection with a potential initial public offering under RG 264. Word version/ PDF version
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Guide email JLM language on joint activity for the Equity Capital Market and Debt Capital Market
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In the context of Australian competition law, it is good practice to acknowledge in writing (commonly through an email) the intention to conduct a joint activity in the preliminary communication about forming a new syndicate for a mandate. Standard language for emails from a JLM and an Issuer is provided as a general guide only to indicate the good practice in Australia using similarly worded emails when JLM come together to facilitate a capital raising by an Issuer in order to indicate their intention to collaborate to the extent necessary to assist their client issue or sell equity or debt (as applicable).
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