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ASX New Listing Rules Update

The Australian Securities Exchange (ASX) has recently established a Policy and Listing Standards Committee (Committee) to standardise a preliminary application review process for companies seeking listing on ASX.

According to information provided by ASX, the purpose of the Committee is to establish a mechanism to assess the eligibility and suitability of companies incorporated, mainly operating, or having a majority of their board or controlling shareholders resident, in an emerging or developing market for listing on ASX.

Previously, if a company met the conditions for admission set out in the ASX Listing Rules, the ASX would invariably admit the company on the official list of ASX, however, the proposed change to the admission framework now includes a merit based assessment.

In making such an assessment, the Committee will take into account several factors, including:

  • the structure of the company and the economic commerciality of its business;
  • location of the company’s business operations and where it generates revenue;
  • the capability and experience of the board of directors and management team;
  • the credentials of the company’s advisors, including its lawyers, accountants and corporate advisors;
  • the purpose of the company in pursuing listing on ASX – in particular, the company should be able to demonstrate a genuine capital market objective, ie to raise capital, including that
  • the company should be seeking to achieve a free float of at least 20%.

The Committee is conducting monthly meetings to review proposed listings including both “front door’ and ‘back door’ listings. It is recommended that Companies wishing to list on ASX, lodge a submission with the Committee as soon as possible in their listing process, setting out information dealing with the above factors. This will help avoid delays and unnecessary costs.

While ASX has yet to document the policies and procedures of the Committee, the Committee has begun operation and we will provide an update once ASX issues further information.

The ASX has confirmed that it will:

  • increase the consolidated profit requirement under the profit test for the 12 months prior to admission to at least $500,000;
  • increase the assets test thresholds to NTA of at least $5 million or a market capitalisation of at least $20 million.
  • introduce a 20% minimum free float requirement for ASX listings at the time of admission; and
  • increase the value of the parcel of securities to be held by each security holder from at least $2,000 to $5,000; and
  • to change the minimum spread requirement for ASX listings to require 100-200 security holders if the entity has free float (down from 300-400).
  • BlueMount is currently assisting a leading Chinese real estate developer which is in the final stage of its ASX listing with its compliance with the new requirements and its dealings with the Policy and Listings Committee.

If you have any concerns regarding ASX’s new Policy and Listing Standards Committee, or require assistance communicating with ASX regarding your plans to list, please contact us.
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