ASX consults on changed requirements for admission

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The ASX has launched a consultation paper – ‘Updating ASX’s admission requirements for listed entities’ – proposing changes to admission requirements and includes a list of key questions for comment.

The ASX has reviewed its requirements for admission to the ASX official list and is proposing changes to ensure that the ASX market continues to be a market of quality and integrity, and remains internationally competitive.

The key changes relate mostly to entities seeking to list in the “ASX listing” category and include:

  • Increasing the financial thresholds for listing – both for the profit test and the assets tests;
  • Introducing a minimum free float requirement;
  • Changing the ‘spread test’ to better demonstrate a sufficient level of investor interest in the entity and its securities to justify listing;
  • Making the minimum working capital requirements consistent across all entities admitted under the assets test; and,
  • Introducing a requirement for entities admitted under the assets test to provide audited accounts for the last three full financial years.

A number of other changes are also proposed to simplify and improve the drafting and operation of the admission rules generally.

The proposed rule changes complement changes that ASX has already made to its admission processes to maintain and enhance the integrity and reputation of the ASX market.

In this regard, listing rules 1.19 and 2.9 currently provide that ASX has an absolute discretion in deciding whether or not to admit an entity to the official list and to quote its securities. This includes both ‘front door’ and ‘back door’ listings. The discretion not to admit and quote may be exercised even where an entity technically meets all of the specific conditions set out in the listing rules for listing and quotation.

Earlier this year, ASX established a formal process for reviewing certain types of listing applications to determine whether ASX should exercise its discretion under listing rule 1.19 to refuse admission.

The consultation paper can be found at the ASX website.

The ASX is seeking submissions on the proposals canvassed in the paper by 24 June 2016, to:

AusBiotech will be making a submission and members are invited to comment on the consultation paper, until 21 June, by contacting Lorraine Chiroiu, Chief Industry Affairs Officer ( 0429 801 118).