“While traditional methods of capital raising will continue to be popular (i.e. institutional placements and entitlement offers), many companies will also be considering alternative structures such as convertible notes and offers underwritten or supported by major shareholders – these arrangements will give rise to legal complexities that lawyers will need to advise on,” he explained.

The extreme market dislocation currently being experienced, Mr D’Andreti mused – and the responses of central banks and governments – is in some respects reminiscent of the GFC, he said.

“However, the circumstances which have caused this current market disruption are very different to those of the GFC and some of those differences will have a bearing on the nature (and level) of future fundraising activity and associated legal issues,” he said.

“There are some lessons that can be drawn such as that, just like in the GFC, boards of companies that need capital will need to grapple with wider discounts in pricing deals and more dilutive structures (placements and ANREOs) to obtain funding certainty. More difficult though will be assessing when to raise and, if so, the adequacy of funding given the uncertainty about how long COVID will affect the economy.”

Lawyers in this space will still face numerous challenges in their work in the near future, Mr D’Andreti noted.

“Capital market lawyers should be considering how clients can best structure capital raisings to maximise funding certainty during the current market volatility that we are seeing which requires consideration of factors such as shareholder approval requirements, the availability of the ‘low doc’ regime and managing underwriting risk,” he suggested.

“Lawyers will also need to help clients manage complex disclosure issues around the impact of COVID-19 on its business and balance sheet and ensuring appropriate due diligence processes are in place in order to inform the company’s disclosures (including risk disclosures).”

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When asked how best capital markets lawyers can work in tandem with their clients as well as in-house legal departments at this juncture, Mr D’Andreti said: “Capital market lawyers should be having conversations with clients about the specific impacts that COVID-19 will have on their operations and financial position and also helping in-house counsel ensure the entity is in a state of readiness so that they can move quickly to raise when required.”

For listed companies, key legal issues will be around continuous disclosure obligations (including the withdrawal or any earnings guidance), balance sheet and solvency issues and funding options. Lawyers can also assist clients keep up to date with the various responses from regulators (e.g. ASX, ASIC and APRA) that are relevant to capital raisings,” he added.