The Australian Securities Exchange (ASX) has issued its latest consultation paper that outlines a number of proposed changes to its comprehensive list of requirements for admission to its official listing, per a recent ASX report.
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The latest changes are by the ASX are reflective of a desire to maintain and bolster the reputation of the exchange as well as its overall transparency in the Australian market. As such, the ASX has made concerted attempts to substantiate the levels of market capitalization needed from participants, as well as mitigating myriad asset tests to ensure full transparency and disclosure.
In particular, the ASX has proposed an increase of key financial thresholds for listings, which includes net tangible assets of $3 million or a market capitalization of $10 million to an NTA of $5 million or a market cap of $20 million. By extension, the ASX has proposed a 20% minimum free float requirement as well as an alteration to the spread test to better justify a sufficient level of investor interest in a given entity and its respective securities.
Moreover, the ASX wishes to create a more level playing field by advocating a minimum $1.5 million capital requirements threshold for all listed entities admitted under the assets test. In conjunction with this threshold, the ASX has also proposed a requirement for listed entities to provide audited accounts for the last three full financial years, which should help allay the possibility of any background issues for companies – these rules are slated to come into effect by September 1, 2016.
Backdoor Listings
In addition to the aforementioned proposals, the ASX has also taken efforts to update some of its existing procedures and guidance, specifically in regards to emergent issues with backdoor listings. This will result in suspension whenever the trading of a security of a given entity announces a backdoor listing. Consequently, any and all suspensions due to this process will continue until the entity has re-complied with ASX’s admission requirements, in essence putting backdoor listings on the same level as front door listings.
Kevin Lewis, Chief Compliance Officer, ASX
According to Kevin Lewis, ASX’s Chief Compliance Officer, in a recent statement on the rules and alterations to its listings, “The package of rule, procedure and guidance changes ASX has released today is designed to strengthen ASX’s reputation as a listings market of quality and integrity. It aligns the interests of issuers seeking capital for growth and investors looking for opportunities to build wealth for the long-term. It also reflects the market’s current dynamics and provides enhanced guidance about the standards expected of an ASX-listed company.”
“These proposals maintain the attractiveness of the ASX market as a venue for raising capital and funding innovation, including for technology and other growth companies. The proposed admission framework retains its flexibility to accommodate entities at different stages of their life cycle,” reiterated ASX’s General Manager
