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Changes to ASX Listing Rules

03 November 2016

#Corporate & Commercial Law

Changes to ASX Listing Rules

As you may be aware, the ASX were holding a consultation into proposed changes to the Listing Rule requirements for admission to quotation. These changes were announced yesterday (to read the announcement, click here).

The key listings admission rule changes, effective 19 December 2016, are:

ISSUECURRENT POSITIONNEW POSITION FROM 19 DEC 2016COMMENT
Profit TestRequirement for consolidated profits for the 12 months prior to admission of $400,000An increase in the requirement for consolidated profits for the 12 months prior to admission from $400,000 to $500,000This is consistent with the consultation proposal
Net Tangible Assets TestNet tangible assets test (NTA) of $3 millionAn increase in the net tangible assets test (NTA) from $3 million to $4 millionA proposal to increase it to $5 million was subject to consultation
Market capitalisation testMarket capitalisation test of $10 millionAn increase in the market capitalisation test from $10 million to $15 millionA proposal to increase it to $20 million was subject to consultation
Free floatNilA new 20% minimum free float requirement. Free float = % of the entity’s main class of securities not subject to restriction or voluntary escrowThis is consistent with the consultation proposal
Spread400 holders with free float of 25%350 security holders if free float of between 25% and 50%300 holders if free float of 50%+


A single tier spread test requiring at least 300 security holders each holding at least $2,000 of securities

ASX consulted on a proposal to change the existing spread test to 200 security holders if the entity has a free float of less than $50 million, or 100 security holders if the entity has a free float of $50 million or more, with each of these security holders holding a parcel of securities with a value of at least $5,000


Audit requirements

Under the assets test, accounts (together with any audit or review) for the last 3 full financial years and a half year if the last full financial year ended more than 8 months before the entity applied for admission

New audited accounts requirements for assets test entities requiring 2 full financial years of audited accounts for the entity seeking admission and any significant business it has acquired in the previous 12 months (or proposes to acquire in connection with the listing)

Significant is more than 25% of the consolidated net assets, consolidated total equity interests, consolidated annual revenue (slightly different for mining, oil and gas entities)

Where an entity is more than 6 months and 75 days into the current financial year it will need to produce audited or reviewed accounts for the last half year

ASX consulted on a proposal to require entities seeking admission under the assets test to produce audited accounts for the last 3 full financial years for the entity seeking admission and any entity or business to be acquired by the entity at or ahead of listing


Working capital

Working capital must be at least $1.5m, or if it’s not it would be $1.5m if the budgeted revenue for the first full financial year that ends after listing is included in the working capital

A standardised $1.5 million working capital requirement for all entities admitted under the assets test

This is consistent with the consultation proposal

If you have any questions regarding the changes, please feel free to contact a member of our Corporate & Commercial team.

Authors: Harry Kingsley and Kaveh Zegrati


Contacts:

Melbourne

Harry Kingsley, Partner
T: +61 3 9321 9888
Eharry.kingsley@holdingredlich.com

Sydney

Darren Pereira, Partner
T: +61 2 8083 0487
Edarren.pereira@holdingredlich.com

Brisbane

Trent Taylor, Partner
T: +61 7 3135 0668
Etrent.taylor@holdingredlich.com


Disclaimer

The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this newsletter is accurate at the date it is received or that it will continue to be accurate in the future. 

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