Raising Funds The Right Way: Re QR Sciences Limited

By Justin Mannolini, Rodd Levy and Fiona Gardiner-Hill

Companies seeking to raise funds to stave off financial crisis may often find it difficult to attract a cornerstone investor or third party underwriter. For such companies, fundraising by way of a rights issue, which may include a shareholder underwriting, may be the only viable option.

The takeovers provisions of the Corporations Act provide some flexibility in this respect. In particular, the exemptions to the takeover prohibition in section 611 of the Corporations Act permit a shareholder to cross the 20 per cent takeover threshold (or increase its holding between 20 per cent and 90 per cent) by exercising rights acquired under a pro rata issue (item 10) or by acquiring shares in the capacity of underwriter (item 13).