In our previous alerts (
16 May 2016 and
25 May 2016), we examined the proposed changes to the Listing
Rules which were scheduled to be in place by 1 September 2016. The
proposed changes will raise the bar for admission to the ASX
through a number of amendments to financial thresholds, spread
requirements and working capital requirements in the Listing Rules.
There are also key policy changes which are currently being
enforced by the ASX.
Written submissions in response to the ASX Consultation Paper
have now closed. It comes as no surprise that an influx of feedback
Due to the responses received, there has been movement by the
ASX as to its position on the conditions to qualify for relief from
the '20 cent' rule for backdoor listings. Prior to the
Consultation Paper, a company had to satisfy the following
conditions to obtain an exemption:
the issue price of any securities (other than options) is not
less than two cents and the issue price is specifically approved by
shareholders as part of their approval of the transaction; and
ASX is satisfied that the entity's capital structure after
the transaction will be appropriate for a listed entity.
Pursuant to the Consultation Paper, the ASX included a third
the price at which the entity's securities last traded on
ASX is not less than two cents per share.
This third condition has now been revised by the ASX (with
immediate effect) to require that a company (in additional to
satisfying items 1 and 2 above) must fall within one of the
following categories to obtain the 20 cent waiver:
the price at which the entity's securities traded over the
20 trading days preceding the date of the announcement of the
backdoor listing (or, if the entity was already suspended at the
time of the announcement, the last 20 trading days prior to its
suspension) is not less than two cents each; or
at the same time the entity announces the backdoor listing, it
also announces that it intends to consolidate its securities at a
specified ratio, based on the lowest price at which the
entity's securities traded over the 20 trading days referred to
previously, to achieve a market value for its securities of not
less than two cents each.
ASX has also amended the policy to include a warning statement
that it will closely examine capital raisings by both the target
entity and the unlisted company "to ensure that it does
not undermine the spirit and intent of the 20 cent rule".
Accordingly, companies will need to ensure that pre-transaction
capital raisings do not prejudice the company's ability to
obtain the 20 cent waiver and should seek appropriate legal advice
as early as possible.
Further, due to the volume of submissions received in response
to the Consultation Paper, the ASX has now announced that further
discussions with stakeholders are required, with a final version of
the rule changes to be released in September or October. The start
date for the changes has now been deferred to 19 December 2016.
The ASX's reaction to the submissions certainly foreshadows
further fine-tuning of the changes. Stakeholders will undoubtedly
be pleased that there may be some room to move.
This newsletter includes links to recent documents relating to superannuation, funds management & financial services.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).