Equity Capital Markets Law Definition
“Equity Capital Markets” is the practice area that relates to securities issuance and other equity market transactions.
This area of practice is typically understood to encompass the following specific services and transaction types:
•Public listings - which involves advising entities on their entry onto public markets such as the Australian Securities Exchange (“ASX
”), whether by an Initial Public Offering (commonly referred to as an “IPO
”) or by a reverse takeover of a pre-existing listed entity (referred to as a “backdoor listing”);
•Capital raisings - which involves advising entities (whether public or private) on a spectrum of secondary securities offerings, including placements, rights issues, public offers, and hybrid raisings;
•Offerings of securities by entities (whether public or private) under executive or employee incentive schemes, including share, option, and performance rights’ plans;
•General corporate law, regulatory compliance, and ASX Listing Rule advice - including advice regarding directors’ duties, regulatory approvals, and an entities disclosure requirements to its shareholders and investors; and
•Corporate governance - which may involve designing and assisting in implementing necessary corporate governance policies and systems, advising on corporate governance issues and ensuring compliance with the ASX Corporate Governance Principles and Recommendations.
In Australia, the process by which entities solicit investments in their securities has been a central concern of corporate regulation. To balance the informational asymmetries between issuer and investor, the Corporations Act 2001
(Cth) regulates all fundraising activity in Australia through the Australian Securities & Investments Commission (“ASIC
”). For entities which are listing or are already listed on the ASX, the ASX Listing Rules also prescribe certain rules and regulations regarding the issue of securities (amongst other matters).
In addition to acting for the entities seeking to raise capital from equity capital markets, lawyers in this area also often act for the numerous other parties involved in equity market transactions, such as selling shareholders, brokers, lead managers, investments banks, private equity firms, corporate advisors, and underwriters.
This area of practice also often intersects with other areas of legal practice such as “Mergers & Acquisitions” and “Private Equity.” For example, a private equity client may pursue an exit of its investment in an entity by undertaking a dual track IPO and trade sale process, or a client may raise capital in order to undertake an acquisition. Accordingly, lawyers in this practice area also may act for entities with respect to significant transactions, including major changes to the nature or scale of the entity’s activities.