VWAP for share purchase plans under Exception 4
Chapter 10 contains one VWAP pricing floor and it sits in the SPP carve-out, but note the scope before borrowing the number: Exception 4 is an exception to rule 10.11, the related party approval requirement, so it governs participation by related parties and other persons in a position of influence rather than SPPs at large (ASX Listing Rule 10.12, Exception 4). Where it applies, the issue price must be at least 80% of the volume weighted average market price for securities in that class, calculated over the last 5 days on which sales in the securities were recorded before the day on which the issue was announced, or the day on which the issue was made (ASX Listing Rule 10.12, Exception 4).
How the rule works
Exception 4, one of the exceptions set out in rule 10.12, takes an issue of securities under an SPP outside the rule 10.11 approval requirement where the plan satisfies the conditions in ASIC Corporations (Share and Interest Purchase Plans) Instrument 2019/547 (ASX Listing Rule 10.12, Exception 4). Conditions attach: the exception is available only once in any 12 month period, the number of securities to be issued must not be greater than 30% of the fully paid ordinary securities already on issue, and the issue price must meet the 80% floor (ASX Listing Rule 10.12, Exception 4).
The mechanic is the same shape as the placement floor, with a shorter window and a higher percentage. The window is built by a backwards walk of the same shape as the 15 day window under rule 7.1A.3, and a day on which nothing was recorded is skipped in both (ASX Listing Rule 10.12, Exception 4; ASX Listing Rule 7.1A.3).
Two drafting points are worth settling before the arithmetic starts. Exception 4 says "days" where rule 7.1A.3 says "trading days", and what fills a slot is a day on which sales were recorded, where rule 7.1A.3 asks for a day on which trades were recorded (ASX Listing Rule 10.12, Exception 4; ASX Listing Rule 7.1A.3). Whether the omission is deliberate is not settled by either extract, so record which counting basis was applied.
On a window VWAP of $0.20 the floor is 0.80 x $0.20 = $0.16. A five day window is also more exposed to a single day than a 15 day window: weight in a VWAP follows volume, so on days of similar size one day inside five carries roughly three times the share of the total that it would carry inside 15. That matters when a plan is priced off a period containing an announcement day.
Plans priced off a VWAP outside the exception take their window from the offer terms rather than from a rule, which means the offer document has to fix all three of the things a rule would otherwise fix: the number of days, what ends the window, and what fills a slot.
What the report includes
- The figure and the window
The volume weighted average market price for the security, with the first and last dates of the period it covers and the number of days in it.
- Methodology stated against the rule
The calculation is prepared to the ASX Listing Rule 19.12 definition of volume weighted average market price, from trade-level data rather than a daily price table.
- What the report sets out
A daily breakdown of volume, value and VWAP with the period low, high, opening and closing price, the complete trade-level data set behind the calculation, and a record of any excluded trades.
- The excluded trade types removed
Block trades, large portfolio trades, permitted trades during the pre-trading and post-trading hours periods, out of hours trades and exchange traded option exercises are taken out before the sum is run (ASX Listing Rule 19.12).
- Workings anyone can redo
Every row of the trade-level list carries its timestamp, price, volume and the running turnover, so anyone who disagrees with the figure can redo the arithmetic from the same data.
- PDF report and Excel spreadsheet
A written report plus a spreadsheet carrying the input data and the calculation steps.
Every regulatory statement on this page names the rule or guidance note it comes from, and every report states the window, the markets counted, the trade types removed and the source of the data. Reports are prepared by Riverstone Corporate Pty Ltd T/AS VWAP.com.au, ABN 42 883 208 403, West Leederville, Western Australia.
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Common questions
Does Exception 4 apply to every share purchase plan?
No. Exception 4 is an exception to rule 10.11, the related party approval requirement, so it governs participation by related parties and other persons in a position of influence rather than SPPs at large (ASX Listing Rule 10.12, Exception 4). Plans offered outside the exception are frequently priced off a VWAP as well, but there the window comes from the offer terms rather than from a rule.
How long is the SPP VWAP window?
Five days. The issue price must be at least 80% of the volume weighted average market price for securities in that class, calculated over the last 5 days on which sales in the securities were recorded before the day on which the issue was announced, or the day on which the issue was made (ASX Listing Rule 10.12, Exception 4).
What is the minimum issue price under the exception?
Eighty per cent of the window VWAP (ASX Listing Rule 10.12, Exception 4). On a window VWAP of $0.20 the floor is 0.80 x $0.20 = $0.16. The percentage is higher than the 75% floor for a placement under rule 7.1A.3, so the same VWAP produces a higher floor.
Which end point applies, the announcement day or the issue day?
The rule offers two end points joined by "or", the day the issue was announced and the day the issue was made, without spelling out which governs, where rule 7.1A.3 states the condition that shifts an issue from one anchor to the other (ASX Listing Rule 10.12, Exception 4; ASX Listing Rule 7.1A.3). Two readings are open on the text and the extract settles neither, so record which end point was used and why.
What other conditions attach to the exception?
The exception is available only once in any 12 month period; the number of securities to be issued must not be greater than 30% of the fully paid ordinary securities already on issue; and the issue price must be at least 80% of the volume weighted average market price over the 5 day window. The exception does not apply to an issue of securities under an agreement to underwrite the shortfall on a plan (ASX Listing Rule 10.12, Exception 4).