Ben Rebbeck, Executive Director
The ASX has recently launched a consultation process ahead of proposed changes to the requirements for companies to list on the ASX market. If implemented, the changes will raise the financial and shareholder spread hurdles for all companies seeking to list, whether by IPO or ‘back-door’ listing.
According to the ASX, the proposed changes will “ensure that the ASX market continues to be a market of quality and integrity, and remains internationally competitive”.
The changes proposed include increasing the financial thresholds for listing, which have remained unchanged for over a decade, to either:
- Profits of at least $500,000 in the past 12 months (currently $400k); or
- NTA of at least $5 million or a market cap of at least $20 million (currently $3m and $10m respectively), and at least $1.5 million of working capital
In addition, the ASX is proposing a number of new requirements including:
- a minimum 20% free float requirement;
- changing the ‘spread test’ so that companies with small market caps (less than $50m) have at least 200 shareholders with more than $5,000 of shares; or at least 100 shareholders for larger companies;
- introducing a requirement for entities admitted under the assets test to provide audited accounts for the last three full financial years
The ASX has also changed its policy for back-door listings so that it now suspends trading in an entity’s securities from the moment it announces a back-door listing transaction until it has re-complied with ASX’s admission and quotation requirements. This change in policy will put back-door listings on the same footing as IPOs and is effective immediately.
Full details of the proposed changes and ASX’s consultation process can be found here.
Submissions are due by June 24 2016.